GBP/USD Sees Slight Improvement, But Still Under Pressure

GBP/USD Sees Slight Improvement, But Still Under Pressure

Posted Friday, March 20, 2020 by
Arslan Butt • 1 min read

Early on Friday, the pound is trading steady against the US dollar after seeing a slight strengthening in the previous session after the BOE announced one more emergency rate cut and promised to restart its asset purchase program. At the time of writing, GBP/USD is trading at around 1.166.

Over the past several days, the pound lost as much as 12% of its value against the US dollar over a wave of panic selling in global markets as investors rushed out of other instruments and towards the safety of the dollar. On Wednesday, GBP/USD weakened to the lowest level seen since 1985 when it touched 1.145.

GBP/USD also saw a slight boost as the risk sentiment improved in markets over increased hopes for additional stimulus measures being undertaken by governments and central banks as they attempt to prevent the global economy from falling into recession as a result of the coronavirus pandemic. However, analysts anticipate the Cable to trade under pressure in the coming days on account of Britain’s high current accoutn deficit and inadequate measures to tackle the spread of infections across the country.

Analysts also expect volatility to remain high in GBP/USD as forex traders move away from riskier currencies towards safe haven instruments on account of the heightened uncertainty prevailing in global markets. Expected volatility gauges for the pair soared to the highest levels seen since the 2016 Brexit referendum during the previous session, forecasting the possibility of bigger moves in the pair coming up soon.

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