- Summary:
- The GBP/USD is under intense pressure as the new virus strain continues to rock the market. What next for the vulnerable pound sterling?
The GBP/USD is down for the third consecutive day as worries of the new strain of coronavirus outweigh the latest hopes of a Brexit compromise. The GBPUSD pair is trading at 1.3395, which is substantially below this year’s high of 1.3630.
What happened: The biggest catalyst for the current price action of the GBP/USD price is the new strain of the virus. UK health officials say that the virus is spreading 70% faster than the original one. This has pushed more countries to place a ban on UK travel, risking another recession.
What about Brexit: On a positive side, the GBP/USD is also reacting to news of a potential compromise on fisheries. According to the FT, which cited Raoul Ruparel, the two sides are about to find a solution on this key issue. Still, they have not made a decision on other issues like fair trade and governance of the deal. Also, Boris Johnson’s aides said that any deal reached will need to be voted in parliament before December 31st.
UK GDP data ahead: The GBP/USD will also react to the final reading of UK GDP data. Economists don’t foresee any major changes. They see the economy rising by 15.5% in the third quarter. They also predict that it will decline by 9.6% on an annualised basis. Still, these numbers will possibly not have any impacts on the pound sterling.
GBP/USD technical outlook
What next for GBP/USD? On the hourly chart, we see that the pair is under pressure. It is slightly above the first support of the Andrews pitchfork and the 50% Fibonacci retracement level. It is also slightly below the 25-period and 15-period moving averages. Therefore, the pair may continue falling as bears aim for the support at 1.3350.
GBPUSD technical chart
