British Pound (GBP) Latest: GBP/USD and FTSE 100 Under Pressure Again
GBP price, FTSE news and analysis:
- Concerns about the spread of Covid-19 infections in the US and Australia are weakening risk-on assets such as stocks and the British Pound.
- However, the UK economy will likely bounce back to growth in Q3, according to a poll.
GBP/USD under downward pressure
Risk-on assets, including both GBP and the FTSE 100 index of leading London-listed stocks, are sliding as concerns mount about the spread of Covid-19 infections. In the US, Florida, Oklahoma and South Carolina all reported record increases in new cases Wednesday after seven other states reportednew highs earlier in the week. Australian data showed the biggest daily rise in infections in two months.
In response, the FTSE was down around 1.5% in early London business Thursday and GBP/USD dropped back after testing resistance just above the 1.25 level.
GBP/USD Price Chart, Two-Hour Timeframe (June 5-25, 2020)
Chart by IG (You can click on it for a larger image)
However, there was some relatively good news in a poll of economists by the Reuters news agency that suggested a strong bounce in UK growth in the third quarter of this year. It forecast that the UK economy will expand by 10.5% in Q3 after a predicted 17.3% contraction in Q2. The poll results also pointed to the Bank of England leaving Bank Rate at 0.1% until at least the end of 2022 and to purchase more assets.
The International Monetary Fund said Wednesday that it is now projecting a deeper global recession in 2020 and a slower recovery in 2021 compared to its April forecasts.
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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.