GBP/USD: Five reasons to continue the slide

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.”