GBP: under pressure

GBP: under pressure

2020-05-12 • Updated

Let’s look at the factors that move the British pound and what restrictions it can meet on its way.

Market sensitivity

First of all, GBP is quite sensitive to the market sentiment. This week the British pound has dropped as investors worry about the second wave of coronavirus. Those concerns were based on a small outbreak of covid-19 in Wuhan. Also, a poor data from Germany proved that easing lockdowns is quite risky as it has leaded to the reproduction of new coronavirus cases there.

Stocks and GBP are in one boat

The British pound always comes along with the stock market as they both depend on a risk appetite. So, when stocks decline, investors turn away from pound to the safe-haven US dollar. There is a tight positive correlation in the price dynamic between GBP and S&P 500. According to the ING Bank, the S&P 500 price will contract by 20% this year. So, we can assume that GBP will move in the same direction in the long term. However, any weaknesses in stock markets are short-lived and often followed by fresh buying. It’s better to continue watching changes in the stock market to get a hint.

EU and UK

Another aspect to consider when you trade GBP is the result of trade negotiations between the EU and UK. Both sides still have some disagreements, when it remains nearly 8 weeks till the end of their deadline to make a deal. These worries about the failure to come to a common decision may limit the upside potential of pound or even push it down.

Upcoming data from UK

The GDP release will take place tomorrow on April 13 at 9:00 MT time. It will reveal how deep was the damage from the coronavirus. Analysts are expecting a contraction of -7%. Investors are now adjusting “to the prospect of a long, slow, economic re-opening,” said experts.

Brief technical outlook

After strong fluctuations during February and March EUR/GBP stabilized and entered a horizontal corridor in April. Now it’s trading in a horizontal corridor. Look for the break out at 0.8845, when it may continue increasing further. Support lines are at 0.869 and 0.8645.

EUR.png

TRADE NOW

Similar

Latest news

USD: Powell Speaks on Cutting Interest Rates
USD: Powell Speaks on Cutting Interest Rates

Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...

WTT: Currency Pairs To Trade In April
WTT: Currency Pairs To Trade In April

Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera