- Sterling finds no takers as UK’s finance minister warns of massive economic contraction.
- The coronavirus-led uncertainty could keep the US dollar better bid.
- European markets are closed on account of Easter Monday.
GBP/USD is struggling to extend its four-day winning streak, as Sterling is struggling to draw bids amid heightened fears of a sharp economic slowdown.
The currency pair is trading near 1.2465 at press time, having faced rejection at 1.2486 on Friday. That level capped upside on March 27.
UK GDP to contract 30% in Q2
Britain’s gross domestic product (GDP) could fall by up to 30% in April to June period due to the coronavirus outbreak, Finance Minister Rishi Sunak said, according to The Times. Sunak added that ten ministers were asking for easing of lockdown restrictions, starting from May.
“It’s important that we don’t end up doing more damage with the lockdown. We’re looking at another three weeks of lockdown and then we can start to ease it,” a minister said.
Calls for a partial end of lockdown are increasing across the globe, as it is increasingly becoming clear that the world economy is heading toward an economic depression worse than the one seen in 1930.
However, if the number of coronavirus cases continues to rise, then governments would be left with no choice but to keep the lockdown going. The uncertainty is likely to keep the demand for cash, mainly the U.S. dollar, strong in the near future.
Hence, the path of least resistance for GBP/USD appears to be on the downside. Britain has so far reported 9,875 deaths from the coronavirus pandemic, the fifth-highest national number in the world. Prime Minister Johnson’s office said on Friday that he was back on his feet but will need time off to recover from the coronavirus infection.