GBP/USD Steady But Weak After UK Extends Lockdown
Arslan Butt • 1 min read
The Pound is trading somewhat steady against the US dollar after weakening slightly in the previous session after the UK indicated an extension of the lockdown for at least another three weeks. At the time of writing, GBP/USD is trading around 1.248.
On Thursday, the UK government announced that although there were signs of the number of coronavirus cases peaking in the country, it would be safer to prolong the lockdown to prevent an additional surge in cases. The government is also expected to review its guidelines for social distancing measures soon, but these signs point to additional strain in for the economy.
With all the focus remaining on the coronavirus pandemic, a comment from PM Boris Johnson’s spokesperson on refusing a possible extension of the post-Brexit transition period went almost completely unnoticed by the markets. The IMF had recommended that the UK consider extending the Brexit transition period to avoid straining the economy which has already been ravaged by the ongoing pandemic.
Lately, bearish moves in GBP/USD have been driven by a strengthening in the US dollar as a preferred safe haven currency in the wake of the heightened uncertainty prevailing in the markets. Global financial markets are worried about a possible recession as a result of the pandemic, maintaining a risk-off sentiment and keeping traders away from currencies like the GBP.