Home Forex News GBP/USD Turns Bearish As Dollar Grinds Higher

GBP/USD Turns Bearish As Dollar Grinds Higher

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  • U.S GDP Contraction
  • COVID-19 Fears
  • K Economic Slowdown

GBP/USD was struggling to stay above 4-days low, Friday morning, as the British Pound remained under pressure on the U.S dollar rising high, on a spike of risk sentiments in the market. Bank of America analysts have already warned that the Pound is starting to behave like an emerging market currency amid Brexit and liquidity problems.

U.S Dollar Bids

The pair continues to edge lower on the dollar, strengthening on strong demand for safe havens in the currency market. Brexit uncertainty and concerns about the U.K economy continue to fuel weakness in the sterling triggering a sell-off of the GBP/USD pair.

Time                            : 06-26-2020

Pivot                           : 1.2426

Technical View           : Long Above 1.2406

Target                         : 1.2386 next 2 targets are 1.2372 and 1.2345

Comments                  : Weak Bearish

Last Price                    : 1.2405

The dollar is strengthening across the board, sending the GBP/USD pair lower as concerns over economic slowdown continue to send traders into safe-havens. Immediate data indicates that the U.S GDP decreased by 5% in the first quarter as the economy came under pressure from the COVID-19 pandemic.

The situation is not expected to get any better in the second half of the year as the second wave of infections threatens mass lockdowns across the county. Corporate profits continue to edge lower, decreasing $262.8 billion in the first quarter as the economy struggles to recover from the pandemic.

Unemployment levels continue to edge higher, signaling that layoffs remain the order of the day even with the U.S economy reopening. The past week, close to 1.5 Americans filed for unemployment benefits affirming weakness in the U.S economy.

GBP/USD Outlook

U.S economy weakness and uncertainty is one of the developments causing the U.S dollar to strengthen as traders rush to safe havens. Likewise, the GBP/USD continues to edge lower.

In addition, signs the U.K economy could take longer, recover from the pandemic, and continue to weigh on sterling strength, sending the pair even lower. A recent CBI survey indicates that 62% of U.K retailers don’t expect consumer demand to increase even with the reopening of the U.K economy.

Looking ahead, the release of the U.S Core PCE Price Index should paint a clear picture of how the U.S economy is doing, likely to influence dollar strength conversely GBP/USD price action heading into the weekend.

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