GBP/USD: Five reasons to continue the slide

FXStreet Team FXStreet

GBP/USD has been on the back foot amid rising coronavirus concerns on both sides of the pond and the cable may continue its slide due to the following five reasons explained by FXStreet’s analyst Yohay Elam.

Key quotes

“Leicester lockdown: The gradual reopening of the British economy – slower than continental peers – is seeing its first significant setback. Leicester, a mid-sized town in the Midlands, will suffer from new restrictions.”

“Weaker growth: Final GDP figures tend to confirm the initial read, but things are different in coronavirus times. First-quarter GDP was downgraded from 2% to 2.2% – and the second quarter will likely see a double-digit plunge.”

“Doubts about Boris' plan: Sterling has received support in recent days as PM Boris Johnson touted a plan to reconstruct the UK and ditch austerity. While the PM invoked former US President Franklin Roosevelt's New Deal – the details that are emerging seem more modest. An investment of around £5 billion in infrastructure may fail to convince investors in an economic recovery.”

“US coronavirus: Cases continue rising at a rapid pace in California, Florida, and Texas – with the latter suffering high pressure on its hospitals. Various states have reimposed restrictions or halted reopening plans – including New Jersey, where cases are falling. New York may also hit the brakes.”

“US data expectations too high: One of the reasons for market optimism came from a surge in Pending Home Sales in May. Estimates remain elevated for the Conference Board's Consumer Confidence. However, economists may have underestimated the second wave and a small miss may boost the safe-haven dollar.”

Author

FXStreet Team

FXStreet

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold holds above $5,000 as bears seem hesitant amid Fed rate cut bets

Gold edges lower at the start of a new week, though it defends the $5,000 psychological mark through the Asian session. The underlying bullish sentiment is seen acting as a headwind for the bullion. However, bets for more rate cuts by the Fed, bolstered by Friday's softer US CPI, keep the US Dollar bulls on the defensive and continue to support the non-yielding yellow metal as the focus now shifts to FOMC Minutes on Wednesday.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.