The scale of the UK’s support packages should offset the negative of the UK’s trade balance pressures. A more stable global backdrop should also allow GBP/USD to rebound, in the opinion of economists at Westpac Institutional Bank.
“The UK Government raising its contingency funds to GBP266bn suggests that it is preparing for more.”
“Open-ended Fed QE, diminished USD yield support and a much less-compelling US growth advantage should weigh on USD prospects.”
“GBP/USD may be volatile but is likely to remain within a 1.20-1.25 range unless risk aversion causes another rush of USD demand.”