GBP/USD Trades Steady, But Could Weaken Over Ballooning Debt

GBP/USD Trades Steady, But Could Weaken Over UK’s Ballooning Debt

Posted Thursday, April 2, 2020 by
Arslan Butt • 1 min read

On Thursday, the Pound is trading somewhat bullish against the US dollar, holding under the 1.25 level even as markets focus on the economic fallout from the raging coronavirus pandemic worldwide. At the time of writing, GBP/USD is trading around 1.242.

Recent economic data releases reveal the impact on the manufacturing sector across the world, including in the UK, as a result of the lockdowns which have disrupted global supply chains and dented consumer demand. Previously, GBP/USD had been trading bearish over increased preference for the dollar among traders as a result of the increased uncertainties in global markets.

However, GBP/USD has recovered lately with traders buying back other currencies at the end of the first quarter of the year. So far, GBP/USD has lost around 6% of its value this year, as markets continue to be dominated by the sentiment surrounding coronavirus for now.

GBP/USD is expected to trade under pressure for some time to come after ratings agency Fitch cautioned about the Britain’s ballooning debt being driven by the government’s latest fiscal stimulus measures. According to estimates by S&P Global, Britain’s debt-to-GDP ratio could rise over 90% in 2020.

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