GBP Weekly Review (May 11 – 15)

GBP Weekly Review (May 11 – 15)

It was another beatdown on Sterling this week, once again on rising Brexit fears, terrible economic data from the U.K., and geopolitical/pandemic issues putting pressure on risk assets.

We also saw rhetoric from the Bank of England raising the probability of more stimulus measures coming, likely adding to traders’ bearish views on the British pound.

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart
GBP Weekly Performance from MarketMilk
GBP Weekly Performance from MarketMilk

United Kingdom Headlines and Economic data

Monday:

Boris Johnson’s 50-page plan for lifting lockdown revealed
BoE’s Haldane sees long-term COVID risks, perhaps not ‘The End of the World’
Increased global risk aversion sentiment on rising US-China tensions and fears of a new infection wave was likely the driver for Sterling’s underperformance against the safe havens during the Monday session.

Tuesday:

U.K. government to keep paying wages of furloughed workers until end of October as jobs scheme extended
More monetary easing in the UK ‘quite possible,’ BOE deputy governor says
Along with the possibility of more monetary easing described above, risk sentiment swung negative during the U.S. session to help push GBP uniformly lower, likely sparked by the speculation of a second wave of coronavirus cases outlook and more headlines of rising US-China tensions.

Wednesday:

UK GDP shrinks by record 5.8% in March, harder COVID hit ahead
U.K. Manufacturing production fell by -4.6% m/m in March
The U.K. total trade deficit, excluding non-monetary gold and other precious metals, narrowed by £1.3B to £2.3B in Q1 2020
Bailey hints at more BOE easing to help shoulder virus costs
NIESR suggests around 25% to 30% decline in UK Q2 GDP – the big drop in Sterling on the session seems to correlate with this dismal updated outlook from the National Institute of Economic and Social Research.

  AUD/USD stays depressed below 0.6600 after RBA’s Lowe

Thursday:

We will not give up our independence to EU, UK cabinet agrees
U.K. RICS house price balance down by 21% vs. projected 25% slide

Friday:

David Frost condemns Barnier as talks judder to halt – EU issued ultimatum
UK-EU Deadlocked in Brexit Talks as Clock Ticks Down
Bank of England not considering taking rates below zero: Andrew Bailey
On top of Brexit talks not going well at all, risk-off sentiment picked up during the Friday session to likely add further pressure on the pound. This shift was likely on a combination of weak economic updates from China, Germany, and the U.S., as well as on negative vibes on U.S.-China relations. (Trump administration moves to cut Huawei off from global chip suppliers)

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