- Eurozone GDP drops to -3.8% in Q1 2020
- Chief Brexit negotiator expresses pessimism.
- GBP continues to take a hit because of the coronavirus.
The GBP/USD exchange was off to a bearish start on Monday morning following the release of Eurozone Q1 2020 data on Friday. The report revealed that the Eurozone GDP dropped to -3.8% in the first quarter of 2020, thus representing a record low. Analysts speculate that Q2 data might be worse, especially with the extended impact of the coronavirus, which still has no cure.
Time : 18/05/2020
Pivot : 1.2099
Technical review : Long above 1.2119
Target : 1.2139, 1.2145 and 1.2171
Technical review : Short below 1.2079
Target : 1.2059, 1.2037
Comments : Weak Bearish to Neutral
Last Price : 1.2097
The GBP/USD exchange rate traded at around 1.2097, and it is expected to show demand at around 1.2027 and 1.2298 price levels. The supply zone is expected within the 1.2207 and 1.1936 price points. The exchange rate performance highlights the lack of investor confidence in the GBP due to the negative GBP news. This paved way for the U.S dollar’s gains, which were primarily supported by its safe haven status due to the coronavirus and trade war concerns.
Meanwhile, the resurfaced Brexit concerns have also weighed down on the Pound’s performance on top of the unfavorable GDP. On top of that, Michel Barnier, the Chief Brexit negotiator for the EU, does not believe that Brexit talks will yield a deal. The UK economy is also under pressure due to the increasing unemployment rate.
Things are no better on the Euro’s side, especially with the Eurozone GDP data echoing the tough economic conditions that prevailed in the first quarter of 2020. Germany is scheduled to release its ZEW Survey of Economic Sentiment data for this month, and the UK will release its ILO Unemployment Rate report. The coronavirus related news will largely influence the EUR/GBP’s performance. Nevertheless, the Euro has maintained strong gains against the GBP, which remains relatively weak on account of the unfavorable market data.