The British Pound fell early into Asias Monday trading session, as
forecasted by my colleague Daniel Dubrovsky. Renewed fear about a
disorderly Brexit is amplifying selling pressure in the virus-hit GBP as
the Bank of England hints at the use of negative rates. US equity
futures pointed higher while APAC stocks traded mixed as the
cycle-sensitive Australian Dollar jumped into the green at the expense
of the anti-risk JPY.To get more news about WikiFX, you can visit wikifx official website.
British Pound Experiencing Political Fatigue
The British Pound may suffer as the UK faces internal political
fragmentation following Prime Minister Boris Johnson‘s announcement of
easing lockdown measures. Last month, in a broadcast reaching over 27
million Britons, Mr. Johnson changed the policy approach from “stay at
home” to “stay alert”. This was implemented as a way to balance the
public’s health with maintaining the countrys economic integrity.
However, this been met with growing opposition from lawmakers, who are
openly dissenting orders like those put forth by the government to
reopen schools on June 1. Adam Price, leader of the Plaid Cymru Welsh
outwardly expressed his defiance of Mr. Johnsons announcement:
“Lets not beat about the bush…If you drove into Wales from England at
the moment without a legitimate excuse you would get arrested. Many
people would not have thought that it was even possible but it is the
reality on the ground.”
In Europe, the United Kingdom has the highest number of deaths at
around 34, 546 and a case-fatality rate of 14.3 percent. Furthermore,
renewed fear about the prospect of a disorderly Brexit has been weighing
on the British Pound since last Friday, adding a spice of political
uncertainty to the situation. For a more in-depth analysis, see my
geopolitical outlook for the week ahead here.
Euro Analysis vs British Pound: Outlook Bearish
EUR/GBP may aim to challenge a key inflection range between 0.8986 and
0.9019 (purple-dotted lines). The pairs recent ascent has been in large
part to do with fundamental forces pressuring GBP. If the pair clears
this range with follow-through, the next ceiling to deconstruct may be
between 0.9144 and 0.9178 where EUR/GBP previously stalled following its
aggressive decline from the multi-month swing-high at 0.9417.
