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Sterling is stumbling and for good reasons. While broad dollar strength alongside a retreat in stocks is also behind the slide in GBP/USD, there are three significant UK-related reasons for the fall, according to FXStreet’s analyst Yohay Elam.

Key quotes

“A leap in UK mortalities, from all causes, implies that there are far more COVID-19 deaths than the ones confirmed. Deaths at care homes have been rising and fatalities in other places may also be lacking confirmation. The new statistics and estimation weigh on the pound.”

“The British government is set to decide on extending the lockdown tomorrow. The dates that have been thrown into the air are May 3 and May 7 and these may be extended later on. Apart from uncertainty related to testing, the lack of leadership is also an adverse factor.”

“The Office for Budget Responsibility (OBR) published a scenario in which the economy shrinks by 35% in the second quarter and then rebounds. For the whole of 2020, the institution foresees a drop of 13% in Gross Domestic Product.” 

“US retail sales for March are of high interest. The world’s largest economy has likely suffered a hit to consumption in the month when ‘stay at home’ orders began.”