GBP/USD: Off two-week high, below 1.2400, amid coronavirus crisis

• GBP/USD remains on the back foot.
• UK GDP to drop by 15%, coronavirus restrictions could last six months.
• Intensive care limited to those almost certain to survive, the EU citizens in the UK are at the risk of being illegal.
• UK’s death toll rises to 1,228 with 19,522 cases of infections including British PM Boris Johnson.

With the dire warnings on the UK’s economic growth crossing wires amid expectations of a longer lockdown, GBP/USD drops to 1.2375, down 0.60%, ahead of the London open on Monday. The surge in the virus figures and inclusion of the PM Boris Johnson recently weighed on the pair.

The Guardian relies on the Centre for Economics and Business Research (CEBR) report while conveying that the UK’s economic output can plunge by an unprecedented 15% in the second quarter of the year. The news also cites an increase in the death toll to 1,228 and 19,522 as positive cases including the national leader. Earlier, the global rating agency Fitch downgraded the UK’s credit rating from AA to AAA- with negative outlook.

Elsewhere, the UK Telegraph came out with the news that the intensive care for coronavirus patients now limited to those 'reasonably certain' to survive, as per the sources from the National Health Services (NHS) London Trust.

Furthermore, The Guardian cites the risk for the EU citizens who have made their homes in the UK to be illegal as the government diverts resources to fight coronavirus. Additionally, Dr. Jenny Harries, deputy chief medical officer for England, said during her daily press conference on Sunday that the current restrictions in the UK could last for six months.

On the contrary, US President Donald Trump anticipates the virus numbers to peak in the next two weeks while avoiding lockdowns in New York, New Jersey and Connecticut.

Amid all this, the market’s risk-tone remains heavy with the US 10-year treasury yields declining below 0.70% and most Asian stocks marking losses by the press time.

While the US Dallas Fed Manufacturing and Pending Home Sales are the only ones to decorate the economic calendar, virus headlines will be the key driver to follow.

Technical analysis

A daily closing below 21-day SMA level of 1.2350 could drag the quote to 38.2% Fibonacci retracement level of the pair’s declines from December 12, 2019, at 1.2217. On the upside, 50% Fibonacci retracement near 1.2470 acts as the immediate upside barrier.