- COVID-19 concerns continue to mount in the UK especially over the prolonged economic impact
- British economy expected to continue shrinking in the next few months.
- Recession concerns will likely weigh in on the GBP.
The GBP/USD was looking weak bearish on Friday morning with the lack of momentum largely attributed to the coronavirus concerns in both the UK and the U.S. The virus has negatively affected the economic performance of both countries. Analysts expect the economic downturn to continue in both economies especially since no cure has been found to combat the illness.
Despite the weak bearish start for the GBP/USD on Friday morning, the price of the currency pair is expected to continue on the bearish momentum. The price is expected to trade below 1.2184 with support expected at 1.2164, 1.2125, and 1.2115 price points.
Both the UK and the U.S are currently among the countries with the highest coronavirus infection and death rates in the world. Governments of both countries have been contemplating easing some of the restrictions on economic activities so that they can aid economic recovery. However, there are concerns that doing so will only escalate the situation, leading to the second wave of COVID-19 infections.
So far more than 33,000 people have died of the coronavirus in the UK and over 86,000 in the U.S. Without a cure, an attempt to reboot economic activity in both countries will likely contribute to a higher infection rate. On the other hand, failure to do so will lead to more economic downturn. Britain is currently on the blink of the largest economic recession that it has experienced in 3 centuries.
The situation will weigh down on both economies, and negatively affect global currencies including the Pound. However, the U.S might not have it so rough because it has been treated as a safe haven by investors and banks with other currencies taking a hit. The USD will thus likely continue to gain more ground against the Sterling Pound.