British Pound (GBP) Latest: Trending Lower Amid Global Risk-Off Sentiment
GBP price, Brexit news and analysis:
- GBP/USD continues to weaken as risk assets sell off globally on fears that the coronavirus outbreak in China will have a negative economic impact.
- With Brexit due on Friday this week, economists continue to worry about the impact on the UK of leaving the EU.
- The chances of a UK interest rate cut this Thursday are now close to 58%.
GBP/USD falling for fifth session in a row
GBP/USD is weakening for the fifth successive session as fears of the economic impact of the coronavirus outbreak in China send assets seen as risky slide lower while money flows into safe havens. Along with currencies such as the Australian Dollar, the Canadian Dollar and the New Zealand Dollar, the British Pound is suffering from a move towards havens such as US Treasuries.
GBP/USD Price Chart, Daily Timeframe (November 15, 2019 - January 28, 2020)
Chart by IG (You can click on it for a larger image)
Sterling’s slide comes as the UK prepares for an interest rate decision by the Bank of England Thursday. Pricing in the overnight index swaps market suggests there is a 58.26% chance of a quarter-point reduction to 0.5% and a 41.79% chance of Bank Rate being left unchanged.
However, economists are more cautious, with a majority predicting the BoE will sit on its hands.
Then, on Friday, the UK will leave the EU and head into a transition period due to last until the end of the year. Michel Barnier, the chief EU negotiator, said Monday that the EU will “never, never, never” compromise on its single market during the negotiations. Leo Varadkar, the Irish Taoiseach – or Prime Minister – added that the EU has an advantage over the UK in the upcoming trade talks between the two sides.
There are also concerns that if the UK agrees to hire China’s Huawei to help build the UK’s 5G network that will damage relations between the UK and the US when trade talks between the two countries also begin.
We look at Sterling regularly in the DailyFX Trading Global Markets Decoded podcasts that you can find here on Apple or wherever you go for your podcasts
--- Written by Martin Essex, Analyst and Editor
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.