Pound Crashes as Investors Prepare for Worsening UK Conditions

The  British pound today crashed to  new lows against the  US dollar as  investors fled the  pound amid widespread coronavirus fear in  the  United Kingdom. The  GBP/USD currency pair’s woes were associated with investors’ adverse reaction to  the  British government’s delayed response to  the  coronavirus pandemic.
The  GBP/USD currency pair today fell from an  opening high of  1.2129 to  a  low of  1.1828 in  the  early North American session and  was headed lower at  the  time of  writing.
The  currency pair’s sell-off was primarily driven by  investor fears that the  worst is yet to  come for  the  UK as  coronavirus cases rise. Investors considered the  government’s measures as being inadequate to  contain the  spread of  the  coronavirus. Boris Johnson‘s government has been criticised for  waiting too long before announcing stringent containment measures such as  the  limited movement of  persons and  banning public gatherings. The  UK is yet to  announce school closures amid rising coronavirus infection even as  a  top UK COVID-19 expert developed symptoms of  the  disease. Investors are expecting the  situation in  the  UK to  worsen given that top scientists hope a  vaccine/cure to  become available in  Summer 2020.
High demand for  the  US dollar, which is the  world’s only reserve currency, also contributed to  the  pair’s decline as  the  US Dollar Index crossed the  100 thresholds. The  empty UK dockets could not help the  cable, which was at  the  greenback’s mercy.
The  currency pair’s future performance is likely to  be affected by  geopolitical events and  US dollar dynamics.
The  GBP/USD currency pair was trading at  1.1867 as  at  12:49 GMT having fallen from a  high of  1.2129. The  GBP/JPY currency pair was trading at  127.57 having dropped from a  high of  130.32.

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