In the Currency market, the pound continuously trading weaker against the euro and the dollar on Friday after weaker-than-expected UK monthly retail sales report. Moving ahead to the last week of this month the investors and traders have become increasingly concerned about the UK’s economic health going forward. The currency has come under pressure after BoE’s stance on negative interest rates and the preparations for a no-deal Brexit. According to economists polled by Reuters, Britain is headed into the most severe economic recession in hundreds of years as a result of the coronavirus pandemic.
These are the few reasons why the pound trading lower against other currency pairs:
- The British pound started this week with a bearish note, on Monday touched $1.2080 its lowest level since March 26th. The pound dropped after the Bank of England official Haldane said that the central bank is examining a range of unconventional policy tools, including negative interest rates. 'The economy is weaker than a year ago, and we are now at the effective lower bound, so in that sense, it's something we'll need to look at - are looking at - with somewhat greater immediacy,' he remarked in an interview. Later during the European session, the pound rebounded to 1.22 after hitting two-month lows.
- On Tuesday the Sterling traded steady as the UK unemployment rate unexpectedly falls to 3.9% from 4% in the previous period and below market expectations of 4.4%. Another factor involved in the GBP recovery after the UK government announced a new tariff regime, known as UK Global Tariff (UKGT).
- During Wednesday the British Pound struggled to edge higher after UK CPI slowed to 0.8% in April 2020, from 1.5% in the previous month and slightly below market expectations of 0.9%. That was the lowest rate since August 2016.
- On Thursday the currency pair slightly rebounded after better-than-anticipated UK PMI prints for May. The services PMI increased to 27.8 in May 2020 from an all-time low of 13.4 in the previous month. Meantime, British Prime Minister's official spokesman said on Thursday that the country has agreed on a deal with a pharmacy company to acquire antibody tests.
- Today we saw the UK April retail sales slumped to -18.1% vs. -15.5% expected, it is the biggest plunge in retail sales due to the coronavirus pandemic. While the core retail sales also missed expectations and fell 15.2%. On the other hand, sales for non-store retailing jumped at a record 18 per cent and sales for alcohol stores went up 2.3 per cent. The Pound dropped to the session low 1.2160 after the weak economic data.
$GBP/USD Technical outlook
The British Pound is the worst performing G10 currency so far this month. The Pound has been under pressure as investors expect an interest rate cut below zero by the Bank of England later this year. Technically the GBP/USD pair trading bearish after the price breaks Thursday low. Overall the movement remained bearish throughout today and at the time of writing the price trading below $1.2180. In the short term if the price breaks below 1.2165 which would open doors towards to May's low of 1.2085 and below that 1.20/1.1980 is next. On the upper side the first immediate resistance around 1.2250 and then 1.23.