British Pound (GBP) Price Outlook: GBP/USD Still Sliding, PSNB in Focus
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- The trend lower in GBP/USD continues as fears grow that rising covid cases globally could derail the economic recovery, benefiting safe havens like the US Dollar.
- The UK public sector borrowed less than expected in the first three months of the financial year but that has failed to lift GBP, which may have been hit by an interview with Prime Minister Boris Johnson’s former aide Dominic Cummings suggesting chaos at the heart of UK Government.
GBP/USD weakness persisting
GBP/USD continues to trend lower as news of rising coronavirus cases globally dampens expectations of a strong economic recovery, lifting the safe haven USD at the expense of “risk on” currencies such as GBP, AUD, CAD and NZD. For GBP/USD that has meant a return to levels last seen early this year, with the potential for further losses to come.
GBP/USD Price Chart, Two-Hour Timeframe (May 27 - July 21, 2021
Source: IG (You can click on it for a larger image)
Data for UK public sector borrowing released Wednesday showed spending exceeding receipts by £22.8 billion in June compared with £20.6 billion in May – worse than the forecast £21.5 billion. However, that was balanced out by news that the UK budget deficit was £69.5 billion between April and June – well below the £92.7 billion forecast by the Office for Budget Responsibility in March.
GBP/USD may also suffer this week from an interview with Prime Minister Boris Johnson’s former aide Dominic Cummings in which he said that the PM resisted a second lockdown and that discussions were held about ousting him.
--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
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