The GBP/USD currency pair is off to a good start this week with some bullish momentum on Monday morning that is perhaps attributed to the fact that the UK Prime Minister, Boris Johnson is out of the ICU.
The GBP/USD exchange rate experienced decent support around the 1.2443 level, especially during the early morning trading hours. The bullish momentum then pushed the price up, breaking through key resistance levels at around 1.2483, 1.2491, 1.2494 and even the 1.2504 level after a noteworthy upsurge. However, the price seems to be respecting the 1.2544 resistance level as some pullbacks have been experienced after closing in on that level.
The bullish momentum may have been fueled by the good news of Johnson’s improving health condition. It was reported about a week ago that the UK Prime Minister was hospitalized after testing positive for the coronavirus which is currently a global threat. However, the latest report suggests that he is on his way to recovery and is no longer in the intensive care unit.
While the news of Johnson’s improving health conditions may have fueled an upbeat mood in the market, there is speculation that the bullish momentum in the GBP/USD might be short-lived. This is especially due to the concerning statements made by the United Kingdom’s Finance Minister, Rishi Sunak, regarding the current state of the economy which is currently slowing down.
The UK’s economy has been greatly affected by the coronavirus pandemic and the current projection is that its GDP will slow down by 30 percent in Q2. This is quite concerning for the economy and the people. It also means that the Pound Sterling will have a harder time trying to hold on to its current gains since investors will likely respond to the Q2 GDP forecasts by selling the GBP. Sunak believes that the current lockdowns to curb the spread of the coronavirus will continue to hurt the economy, yet they are necessary measures.