GBP Market Commentary - Pound Under PressureFundamental Analysis:
UK Economy currently holds a significant current account deficit of £21.1 billion (Q1 2020) or 3.8% of GDP
Indicates a substantial deficit of savers, the UK economy is therefore in need of international savers to plug the gap, however international savers are only willing to come in when there is a strong fundamental outlook.
Over the past few years, investment into the UK as a percentage of GDP has dropped significantly, dropping below France and Germany, highlighting investors are not liking what they see, i.e too much political uncertainty!
Continued uncertainty leads to a further reduction in investment flows leading to potential downward pressure on the value of sterling.
The political and economical future of the UK is looking anything but certain. UK Health Secretary recently warned the UK is at COVID tipping point, with a recent rapidly rising rate of infection, forcing pressure on the Govemernet to introduce further tough nationwide restrictions in a desperate attempt to avoid a 'disastrous' second lockdown.
Further uncertainty over Brexit has also reached a critical point. Boris Johnson latest manoeuvres led to a full-scale rebellion by Conservative MPs and widespread recriminations over his plan to break international law.
Technical Analysis:
The GBP/USD looks to be currently undergoing an ABC correction to the downside after an impulsive leg recovery following the initial COVID sell-off.
A daily close below June highs of the 1.28 handle would be significant, a clear indication of the bears fully taking control
