GBP/USD: Consolidating as COVID-19 remains key driver

• GBP/USD in consolidation below the 1.24 handle and a 61.8% Fibo target. 
• FOMC minutes show how uncertain board members are. as COVID-19 takes charge. 

GBP/USD is trading at 1.2406 and between 1.2287 and 1.2420, higher on the day by 0.63% has reached a 61.9% Fibonacci retracement level and since moving into consolidation from testing back to the mean reversion point around 1.23 the figure. 

The attention has been on the sharp increase in the number of reported COVID-19 deaths over the last 24 hours with 786 new deaths yesterday which was the highest of the outbreak. However, a three-day average of growth in UK deaths of 12.6 per cent is still substantially below the previous three-day growth rate of 22.4 per cent, as noted by analysts at Deutsche Bank while case growth in the UK fell further to 7.0 per cent, with the fewest new cases since last Tuesday.

Meanwhile, the UK data points will have a limited impact on sterling but they will be taken into consideration, along with the rest of the world’s growth outlook. It really boils down to the US dollar though, and whether it can retain its safe-haven status in the face of so much stimulus and debt. However, with volatility here to stay as there not being a viable solution elsewhere, it is likely to retain its bid, s least for the near term. It has certainly been outperforming its G10 counterparts today. 

FOMC minutes failed to spark a reaction

As for the Federal Reserve’s minutes today, the tone conveyed the extent to which the committee is prepared to “use its tools” to alleviate stress in financial markets and to limit the severity of the COVID-19-triggered recession – stressing that rates would stay at zero and how uncertain the outlook is. More on that below: 

• FOMC minutes: All participants viewed near-term economic outlook as having deteriorated sharply

GBP/USD levels