The GBP/USD currency pair demonstrated some weak bearish performance on Thursday as the U.S dollar experienced some gains which were largely fueled by its increasing demand as a safe haven currency.
The GBP/USD currency exchange rate had some bullish performance on earlier in the day on Thursday with the price breaking through the 1.2494 resistance level. However, there were a few weak bearish attempts in which the price of the currency pair managed to break through key support levels including the 1.2454 and 1.2434 before the bearish momentum lost its strength at around the 1.2411 support level.
The weak bearish performance in the GBP exchange rate reflects the bullish momentum that the U.S dollar gained courtesy of the fact that it has been enjoying significant demand. The Greenback is one of the currencies that investors have been using as a safe haven currency because it is not as heavily affected by the coronavirus-induced economic fallout. This is on account of the fact that it the U.S dollar is the global reserve currency and is less likely to collapse under the weight of the current economic decline.
Despite having a high ground as far as economic position is concerned, the U.S dollar has also been feeling the effects of the COVID-19 pandemic. The U.S is one of the countries that have been heavily affected by the virus judging by the number of people infected or those that have succumbed to the viral pandemic. The weak bearish performance in the GBP/USD exchange rate is as a result of this impact.
The GBP/USD remained weak bearish because the dollar lacked enough momentum to push the price below Thursday’s levels. This is likely due to the IMF’s warning of an imminent recession which is fueled by the economic downturn caused by the coronavirus. Investors have thus opted to remain in a cautious mood, thus the lack of enough volumes in the market to sustain the bearish attempts. The fact also remains that the threat is still active and the markets remain exposed to the dangers of extended economic slowdown.