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A bearish start to the week as UK PM hospitalized amid coronavirus

  • GBP/USD sold-into news that UK PM Johnson gets hospitalized.
  • Coronavirus risks will continue to boost have flows for the USD.
  • UK Construction PMI eyed amid a quiet macro day this Monday.

Amid reports that the UK Prime Minister (PM) Boris Johnson is admitted to hospital for some coronavirus-linked precautionary tests combined with persisting broad US dollar weakness, GBP/USD started out a fresh week on a negative note in Asia this Monday.

Coronavirus tightens grip over the UK

The cable remains the main laggard across the fx space so far, as the bears look to test the 0.2200 level, having eroded nearly 60-pips in early trades. The main catalyst behind the sharp drop is about the increased concerns over the PM Johnson’s health condition, as he gets hospitalized after dealing with mild virus symptoms for 10 days after being tested positive.

The Downing Street statement read, “On the advice of his doctor, the Prime Minister has tonight been admitted to hospital for tests. This is a precautionary step, as the Prime Minister continues to have persistent symptoms of coronavirus ten days after testing positive for the virus.”

The recent chatter that the PM is put on the ventilator support is likely to aggravate the pain in the pound. Further, the ongoing strength in the US dollar vs. its six major rivals, in the wake of the increased safe-haven demand, as the pandemic intensifies worldwide and heightens the fears over a global economic recession, collaborates with the downside momentum in the spot, as the British currency gives up its last week’s resilience.

Meanwhile, on the data front, the greenback remained unperturbed by a 7 million drop in the US jobs for March, as the upbeat US ISM Non-Manufacturing PMI boded well for the buck. However, the UK Services PMI data for March was revised down to 34.5 points, which is likely to remain a drag on the sterling.  

In the day ahead, the updates on the PM Johnson’s condition will remain a key driver for the major alongside the US dollar dynamics, as the macro calendar Is relatively quiet, with the only UK Construction PMI of note. Meanwhile, all eyes will be on the UK government COVID-19 meeting, scheduled at 0815GMT for fresh trading impetus. The meeting will be chaired by the UK Foreign Secretary Raab and include the advisers and officials.

Note that the latest data published by the UK’s health ministry revealed that the death toll from the coronavirus increased by 621 to 4,934. The total number of confirmed infections climbed to 47,806.

GBP/USD technical levels to watch

 

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