British Pound (GBP) Latest: GBP/USD Outlook Still Bleak, FTSE Sliding Too
GBP price, FTSE news and analysis:
- GBP/USD is continuing to trend lower, suggesting more losses to come, as bearish fundamental factors pile up.
- There are few signs yet either of a sustained rally in the FTSE 100, which continues to trade broadly sideways.
GBP/USD under the cosh
On Brexit, the deadline for the UK to ask for an extension of the transition period beyond the end of this year has now passed and although face-to-face talks between the UK and the EU are ongoing there are still few signs of progress.
Meanwhile, final data released Tuesday showed the UK economy shrank by 2.2% quarter/quarter in the first three months of this year, the biggest drop in GDP since 1979. The contraction was caused principally by the UK’s lockdown to counter the spread of Covid-19, and the latest news on that front is poor too. A new lockdown is being imposed on the city of Leicester, where there has been a flare-up in novel coronavirus infections.
The damage to the UK economy from the pandemic has persuaded Prime Minister Boris Johnson to emulate the New Deal policies of the depression-era US President Franklin D. Roosevelt, accelerating £5 billion of spending on infrastructure projects. However, this has failed to lift GBP/USD, which continues to trade within a downward-sloping channel on the charts.
GBP/USD Price Chart, Daily Timeframe (March 2 – June 30, 2020)
Chart by IG (You can click on it for a larger image)
Trading in currencies generally is expected to be volatile this session due to month-end and quarter-end flows, which will also likely affect the stock markets. The FTSE 100 index of leading London-listed stocks, which has traded broadly sideways over the past two weeks, was down by around 0.5% in early trading Tuesday.
One other event to watch out for this session will be a speech by Andy Haldane, the Bank of England chief economist, on the “the second quarter”, which is due to be published at 11am London time (1000 GMT).
Don’t miss the latest Trading Global Markets Decoded podcast from DailyFX with special guest Jim Rogers. He talks about the US economy, gold the US Dollar and much more.
--- Written by Martin Essex, Analyst and Editor
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.