GBP/USD Ends Month High Gains

GBP/USD Ends Month High Gains

The GBP/USD currency pair, which had been experiencing a series of gains in recent days, has now reversed its trend, posting a modest decrease of 0.17% from the previous session, bringing it down to 1.2604. If the pair continues to slide, the next support level to watch is 1.2460.

Previously, GBP/USD had reached a four-week high, hitting 1.2629, following the news that UK Prime Minister Boris Johnson had left intensive care and returned home. While this was initially seen as positive for investor sentiment, the news that Johnson was not fully recovered and would not return to work for at least another week has raised concerns about the Pound’s outlook.

Further dampening the outlook for the UK economy, Chancellor Rishi Sunak warned of difficult times ahead, with the Office for Budget Responsibility (OBR) forecasting potential job losses of up to 2 million and a 35% contraction in GDP. Despite these grim predictions, Sunak expressed confidence that the UK economy could recover quickly and strongly once the crisis passes.

The UK’s death toll from the coronavirus has surpassed 12,000, as the country remains under lockdown. Additionally, Brexit negotiations, which had been paused due to the pandemic, are set to resume tomorrow, which could further influence the Pound’s direction.

On the other hand, the US Dollar has been weakening in recent days, particularly against European currencies. The Dollar Index (DXY) dropped by 0.35%, falling below the 100-point mark.

Meanwhile, US President Donald Trump has suspended funding to the World Health Organization (WHO), accusing the organization of relying too heavily on China’s early reporting of the pandemic. The US has contributed $893 million to the WHO, representing nearly 15% of its funding.

As of now, market participants are closely monitoring both the UK’s economic situation and the ongoing geopolitical developments.