GBPUSD Back Over 124 Post Fitch Downgrade
GBP/USD slipped lower in early trade. The rebound is capped as traders await clarity
Share this:
GBP/USD slipped 0.3% lower to US$1.24 in early trade and has retained those losses across the morning session.
The Pound slipped as investors weighed up the impact of a ratings cut by Fitch late on Friday. The ratings agency cited the coronavirus impact and uncertainty over Brexit as the motive for cutting the UK’s rating from AA to AA-. Fitch predicted that UK GDP would drop 4% this year owing to the pandemic related downturn. The rating agency was also concerned about the UK’s fiscal loosening stance amid its big spending plans to shore up the economy.
What next?
Whilst the UK remains firmly on lock down, conflicting comments are leaving traders unsure of the next step, keeping the pound steady. On the one hand, reports suggest that the UK could be on lock down for three months, with social distancing implemented until October. Should this be the case the hit to the UK economy could greater than initially expected.
On the other hand, comments by Neil Ferguson, a Professor at Imperial College advising the UK government said that the UK epidemic is slowing and that antibody tests are the next step. His comments have raised hopes that the UK could be back to work sooner.
Whilst the UK remains firmly on lock down, conflicting comments are leaving traders unsure of the next step, keeping the pound steady. On the one hand, reports suggest that the UK could be on lock down for three months, with social distancing implemented until October. Should this be the case the hit to the UK economy could greater than initially expected.
On the other hand, comments by Neil Ferguson, a Professor at Imperial College advising the UK government said that the UK epidemic is slowing and that antibody tests are the next step. His comments have raised hopes that the UK could be back to work sooner.
Safe haven dollar strengthens as Trump extends social distancing
The US Dollar has picked up at the start of the week, recouping some of last week’s steep losses on the back of an increase risk aversion. Trump extended the US social distancing guidance until the end of April after having previously said that the US would be open for business after Easter. His U-urn comes following dire projections from his advisers.
The US Dollar has picked up at the start of the week, recouping some of last week’s steep losses on the back of an increase risk aversion. Trump extended the US social distancing guidance until the end of April after having previously said that the US would be open for business after Easter. His U-urn comes following dire projections from his advisers.
The broad expectation is that this should be over with by mid-May. There is definitely a feeling that the markets have seen the worst. That said, volatility will remain for the time being as infection rates still have the ability to scare.
Levels to watch
GBP/USD jumped 7% across the previous week, picking up from 35-year lows of US$1.1410 before closing the week at $1.2457.
GBP/USD is consolidating those gains. On the 4 hour chart GBP/USD trades above its 50 and 100 sma, retaining the bullish trend.
Immediate support can be seen at $1.2313 (today’s low) prior to $1.2260 (100 sma) and $1.2750 (low 27th March).
Immediate resistance can be seen at $1.2466 (today’s high) prior to $1.2485 (high 27th March) and $1.2595 (200 sma).
GBP/USD slipped 0.3% lower to US$1.24 in early trade and has retained those losses across the morning session.
The Pound slipped as investors weighed up the impact of a ratings cut by Fitch late on Friday. The ratings agency cited the coronavirus impact and uncertainty over Brexit as the motive for cutting the UK’s rating from AA to AA-. Fitch predicted that UK GDP would drop 4% this year owing to the pandemic related downturn. The rating agency was also concerned about the UK’s fiscal loosening stance amid its big spending plans to shore up the economy.
What next?
Whilst the UK remains firmly on lock down, conflicting comments are leaving traders unsure of the next step, keeping the pound steady. On the one hand, reports suggest that the UK could be on lock down for three months, with social distancing implemented until October. Should this be the case the hit to the UK economy could greater than initially expected.
On the other hand, comments by Neil Ferguson, a Professor at Imperial College advising the UK government said that the UK epidemic is slowing and that antibody tests are the next step. His comments have raised hopes that the UK could be back to work sooner.
Whilst the UK remains firmly on lock down, conflicting comments are leaving traders unsure of the next step, keeping the pound steady. On the one hand, reports suggest that the UK could be on lock down for three months, with social distancing implemented until October. Should this be the case the hit to the UK economy could greater than initially expected.
On the other hand, comments by Neil Ferguson, a Professor at Imperial College advising the UK government said that the UK epidemic is slowing and that antibody tests are the next step. His comments have raised hopes that the UK could be back to work sooner.
Safe haven dollar strengthens as Trump extends social distancing
The US Dollar has picked up at the start of the week, recouping some of last week’s steep losses on the back of an increase risk aversion. Trump extended the US social distancing guidance until the end of April after having previously said that the US would be open for business after Easter. His U-urn comes following dire projections from his advisers.
The US Dollar has picked up at the start of the week, recouping some of last week’s steep losses on the back of an increase risk aversion. Trump extended the US social distancing guidance until the end of April after having previously said that the US would be open for business after Easter. His U-urn comes following dire projections from his advisers.
The broad expectation is that this should be over with by mid-May. There is definitely a feeling that the markets have seen the worst. That said, volatility will remain for the time being as infection rates still have the ability to scare.
Levels to watch
GBP/USD jumped 7% across the previous week, picking up from 35-year lows of US$1.1410 before closing the week at $1.2457.
GBP/USD is consolidating those gains. On the 4 hour chart GBP/USD trades above its 50 and 100 sma whilst retaining the bullish trend.
Immediate support can be seen at $1.2313 (today’s low) prior to $1.2260 (100 sma) and $1.2750 (low 27th March).
Immediate resistance can be seen at $1.2466 (today’s high) prior to $1.2485 (high 27th March) and $1.2595 (200 sma).
Latest market news
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
EUR/USD Forecast: Euro Extends Losses Ahead of Fed Rate Decision
The euro has started to face a more challenging period in the short term. The EUR/USD pair has already declined by nearly 0.81% over the last four trading sessions, a move that has begun to reinforce a meaningful bearish bias in favor of the U.S. dollar.
Gold, Silver, DXY Outlook: Charts Test Defining Support Levels
Gold, Silver, DXY Outlook: Charts test defining support levels as crude oil prices hold above $100, U.S. Treasury yields move higher and hawkish FOMC risks come into focus. Key scenarios to watch.
Dow Jones Forecast: DJIA tumbles as Oil hits $100
U.S. stocks are pointing to a lower open as oil prices breach $100 a barrel for the first time since July, amid deepening tensions in the Middle East. Investors also remain cautious ahead of inflation data later in the week.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.