2021-07-01 12:33:01
The GBP/USD pair is declining during Thursday's trading session and is quoted near the support of 1.38. Sales of the British currency continue for the 7th day in a row.
The pressure on the pound is exerted by a significant deterioration in the epidemiological situation in England. Earlier, the UK authorities reported a rapid increase in the number of cases of a new strain of coronavirus infection. So, on June 15, 7.6 thousand cases were recorded per day, but on June 28, their number was 22.7 thousand. Thus, in just two weeks, the indicator has tripled. If the government fails to contain the further spread of COVID-19, then Prime Minister Boris Johnson will be forced not only to reconsider the decision to completely cancel the lockdown scheduled for July 19, but also to introduce additional restrictions that will negatively affect the national economy, which has already suffered from the consequences of the pandemic. In addition to the problems with COVID-19, Hong Kong said on Monday that, starting today, it will ban all passenger flights from the UK, trying to limit the spread of new variants of the coronavirus in its country.
On the side of sellers of the British currency, there are also weak statistics from England. According to data published on Wednesday, in the 1st quarter, compared to the 4th quarter of last year, the UK GDP declined by 1.6%, although the first estimate suggested a reduction of 1.5%. Market participants believe that against the background of a high probability of a similar decline in the second quarter, the management of the Bank of England is likely to abandon the idea of an earlier tightening of monetary policy.
The strengthening of the dollar also put pressure on the pound. According to ADP data, the number of jobs in the US private sector in June amounted to 692 thousand, while experts predicted employment growth of 600 thousand. Investors are closely monitoring any new information about the state of the labor market, which the Fed pays increased attention to when making a decision on the interest rate. Taking into account the above, we recommend holding "short" positions on the GBP/USD pair with a target of 1.37
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