GBP/USD Weakens Over Worsening Market Sentiment
Arslan Butt • 1 min read
The Pound is trading weak against the US dollar into Friday after falling to the lowest level in five months during the previous session over increasing fears of the economic impact of the coronavirus pandemic. At the time of writing, GBP/USD]] is trading at around 1.262.
The market sentiment deteriorated further after US President Donald Trump announced a month-long travel ban to Europe, even though he did exempt travel to the UK. To make matters worse, the ECB disappointed markets when it unveiled its stimulus package but kept rates steady.
On Wednesday, GBP/USD had traded higher after the release of the British budget and after the BOE cut its key policy rate in a bid to shield the economy from the risks of the rapidly spreading coronavirus. However, the gains were erased the next day as investors she’d their inhibitions and returned towards the US dollar, sending GBP/USD weaker as a result.
Although the response of the government and central bank in Britain were well received by the markets, analysts anticipate that the British economy is headed for a steep slowdown as coronavirus tensions and reigning Brexit related uncertainties make things harder for it than other leading economies.