European session review: GBP appreciates as BoE's new stimulus measures underpin investor sentiment

GBP rose against other major currencies in the European session on Friday, bouncing off more than three-decade lows against USD, as the Bank of England's (BoE) fresh stimulus measures underpinned investor sentiment.

Sterling, along with several other currencies, had suffered significant slumps as investors worried by the coronavirus outbreak rushed to the U.S. dollar, the world’s most liquid currency.

The Bank of England (BoE) cut benchmark interest rates 15 bps to a record low of 0.1% and expanded its bond-buying program by GBP200 billion on Thursday in a new attempt to support the UK economy and financial system amid coronavirus outbreak, helping British government bond yields. And this did provided support to sterling in money markets.

Market participants also digested the Office for National Statistics' (ONS) report, which showed that the UK budget deficit narrowed in February. According to the reportt, public sector net borrowing excluding banks fell to GBP0.3 billion from GBP 0.6 billion in February 2019, as local government and public corporations borrowed GBP3.8 billion and GBP0.2 billion, respectively, while the central government was in surplus by GBP 2.9 billion.