GBP/USD: Depressed below 1.2500 as UK struggles to combat coronavirus
- GBP/USD fails to holds onto Friday’s recovery gains.
- UK PM Johnson very cautious about easing lockdown, under fire for missing initial cobra meetings.
- A lack of medical supplies, doubts concerning the virus toll peak and Brexit keep the Cable heavy.
- US death toll rises, President Trump hints another aid package.
GBP/USD drops 0.16% on a day to 1.2475 while heading into the London open on Monday. That said, the Cable pair fails to hold onto Friday’s recovery gains as broad US dollar strength joins pessimism surrounding the UK, mainly based on the coronavirus (COVID-19) updates and Brexit.
The US Dollar gains fresh bids mainly due to its safe-haven allure after the weekend data renewed pandemic fears. As per Reuters, the US death toll crossed 40,000 whereas SkyNews mentions the UK has a bit over 16,000 people who died due to the virus.
Earlier during the day, the UK Times came out with the news that the UK PM Boris Johnson stays very cautious about lifting lockdown. Further, headlines from the Financial Times (FT) suggest Some 21,000 more UK businesses collapsed in March than the same month a year ago, the first proof of the toll coronavirus is taking on companies.
Not only the virus outbreak but a lack of medical supplies, as spotted by the BBC, as well as the news that the British PM Boris Johnson missed January-February cobra meetings also weighs on the British Pound (GBP), due to showing the Tory government’s lack of performance.
Further, Reuters spotted England’s deputy chief medical officer Jenny Harries while stating that It’s not fair to say we are past the peak but I do think things are looking to be heading in the right direction.
Elsewhere, the UK-EU Brexit drama keeps dragging with the latest news from the UK Express suggesting to keep a hold of Britain’s £39 billion has also been underlined by the cost of dealing with coronavirus particularly the economic £250 billion rescue package announced by Chancellor Rishi Sunak to protect jobs and businesses.
On the other hand, US President Donald Trump provided a hint of another aid package while also pushing for an economic re-open plan.
Moving on, a light economic calendar will keep traders on the lookout of the virus updates for fresh direction. However, any surprise announcement of stimulus might grab the spotlight.
Technical analysis
A failure to keep up the gains, coupled with the sustained trading below 200-day SMA level of 1.2660, keep sellers hopeful. In doing so, the 21-day SMA level around 1.2315 could become sellers’ first choice.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
