GBP/USD: The pound succumbs to King Dollar
|Prime Minister Boris Johnson's coronavirus response is better than that of President Donald Trump but that is insufficient as global investors rush to the safety of the dollar. The next moves depend on the virus news, policymakers' fiscal stimulus, and several data points, Yohay Elam from FXStreet reports.
Key quotes
“If Bailey introduces more bond-buying without additional steps from the government, it could weigh on sterling. However, if it comes in tandem with more government spending, the pound has room to rise as more fiscal stimulus would be good news for the economy.”
“The only figure that stands out on the British economic calendar is the employment report for January. The jobless rate is projected to remain at the historic low of 3.8% while wage growth is projected to edge up.”
“If the mood severely sours, the greenback has room to rise on safe-haven flows. If things are relatively under control, the greenback may move with yields, as it did before the most recent market crash.”
“The Federal Reserve's rate decision stands out on the economic calendar. After the fed surprised with an unscheduled reduction of borrowing costs early in March, it may now double down and slash the remaining 100 basis points and bring the rates to zero.”
“Fed Chair Jerome Powell may shed more light on the new bond-buying schemes and on the bank's readiness to do more. A failure to cut rates could send markets tumbling, while massive money-printing has the capacity to send stocks up and the dollar down.”
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