Pound Suffers 4th Consecutive Day of Loss
For the 4th day in a row, the British Pound has been on the downside. Following the pattern of practically every market, including stocks, currencies, and commodities, the GBP slid down to fresh lows, dropping all the way down to $1.2518 against the US Dollar.
Interestingly enough, the USD has actually strengthened, as one of the few markets going up in current times, while gold, the traditional safe haven asset, has gone down instead. One of the reasons for this is that people are liquidating gold in order to pay off margin calls for other trades, which is also resulting in it being converted to dollars instead. As well as this, the Dollar is also still generating interest, while gold does not. These reasons are why the yellow metal has gone down, reversing earlier gains and defying predictions that it would continue to rally.
In the UK, the death toll from the coronavirus has hit 10, with just under 600 confirmed cases. However, officials are warning that the actual number of infections could be anywhere from 5,000 to 10,000.
Newly appointed Chancellor of the Exchequer, Rishi Sunak, has already had a rough first month on the job as he has had to contend with the coronavirus. He is expected not to proceed with the previously announced tax hike in light of the current crisis.
Meanwhile Prime Minister Boris Johnson has announced new measures, as the government now moves to the ‘delay’ phase of combatting the coronavirus. However, these measures do not include the shutting down of schools, or banning of public gatherings. While Johnson argued that it was crucial to get the timing right for stricter measures, some have viewed these current moves as not enough.
While Ireland has closed schools and other public facilities, Scotland has restricted mass gatherings, and the US has suspended all major sport and Broadway performances, Britain seems to be trying to keep things as normal as possible for the time being. Officials in Britain are arguing that people could tire of such measures after a few weeks. Instead, amongst the soft measures introduced are that those with a continuous cough are only being asked to self-isolate for 7 days, schools are only being advised to cancel trips abroad, and people over 70 and those with illnesses not to go on cruises.
Some experts have cited Italy, a close neighbour, as evidence of how quickly the virus can spread. Italy very quickly became the country outside of China with the largest number of deaths, causing the entire country to come under lockdown.
The United Kingdom is also currently exempt from the 30-day travel ban announced by US President Donald Trump yesterday, which included all other European countries. As the UK is no longer part of the European Union, they were not affected by the announcement.
Today’s analysis on the GBP/USD features both Anish Lal and Philip van den Berg here at BlackBull Markets, who gave a detailed analysis on the technical movements of the Pound, as well as the factors surrounding its drop. You can watch the video below, or on Instagram and Twitter at BlackBull_markets and @BlackBullforex, respectively.
