British Pound (GBP) Latest: GBP/USD to Drop to April Low?
GBP price, news and analysis:
- GBP/USD looks to be heading towards the April 6 low at 1.2166 as traders and investors worry about a possible second wave of coronavirus infections.
- China, South Korea and Germany have all seen new outbreaks and the World Health Organization has warned that the virus may never go away, prompting a move into safe havens such as the US Dollar.
- Federal Reserve Chair Jay Powell has also warned of “significant downside risks”.
GBP/USD heading towards support
GBP/USD continues to head lower on concerns about a possible second wave of coronavirus infections that are driving traders and investors away from riskier assets like the British Pound into the relative safety of the US Dollar. New Covid-19 outbreaks in China, South Korea and Germany have raised worries about the virus again just as governments begin to ease restrictions to help boost economic activity.
In addition, the World Health Organization’s emergencies director Dr Mike Ryan has said “it is important to put this on the table: this virus may become just another endemic virus in our communities, and this virus may never go away.” Federal Reserve Chair Jay Powell has chimed in too, arguing that “the path ahead is both highly uncertain and subject to significant downside risks.”
That has left GBP/USD floundering, trading lower within a downward-sloping channel on the charts and with little support evident before the 1.2166 low touched on April 6.
GBP/USD Price Chart, Four-Hour Timeframe (April 3 – May 14, 2020)
Chart by IG (You can click on it for a larger image)
The markets are also waiting with some trepidation for news from this week’s UK-EU Brexit trade talks amid claims that a trade deal with tariffs on goods is not possible within the timeframe. The talks are due to end Friday.
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--- 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.