GBPUSD declines as fears of a new surge in the Coronavirus mount

Mohammed Abdelkhalik
December 22, 2020

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GBPUSD Outlook: 22nd December 2020

GBPUSD witnessed a decline during morning trading in the UK forex market, recording the third consecutive daily decline, this comes with the reluctance of investors to buy high-risk currencies with the acceleration of the spread of the new strain of Coronavirus in Britain, which made the authorities It is tightening closures and travel bans, which will have negative effects on the economy, at the same time, Britain is still in the limbo of a trade agreement with the European Union, especially with the approaching end of the transition period, which will officially end on December 31.

At 08:02 GMT, GBPUSD fell by 0.33% to trade at $ 1.3422, recovering some of its gains after yesterday’s sharp decline, as the pound lost nearly 2.5%.

Chart of GBPUSD - 22th December 2020

Some pressure on the pound sterling eased the talks between France and Britain to reopen the borders, after closing the main trade routes with them to limit the spread of the virus, which renewed hopes that negotiations will bear fruit on a close trade agreement.

Another positive thing for the pound is the data that showed the country’s economic recovery during the third quarter from the damage of the Coronavirus for the first time, but the new closure threatens to cause another recession.

GBPUSD declines as fears of another virus crisis increase

The US dollar is on the rise as the market reacts to the new strain of the Coronavirus, the dollar index is trading today at 90.132 points, however, the dollar is heading to record its third consecutive quarterly loss and is down 12.5% ​​from its three-year peak in March.

The demand for the US dollar rose after the United Kingdom warned of a new strain of the Coronavirus in the country that is spreading at a rate 70% faster than the original virus, and it is also the main reason behind the increase in the number of virus cases by more than 35,000 recently.

The US dollar index also rose in response to the agreement in Washington on stimulus, and Senator “Michmaconnell” and Speaker of Parliament “Nancy Pelosi” said in a statement to them that they had reached a stimulus package worth 900 billion dollars.

Author Mohammed Abdelkhalik

Professional Trader and Analyst, economist in Financial and Forex market since 2004.holds an MBA from the American University in Egypt. Mohammed works as an economic writer and technical & fundamental analyst for many international Forex and financial trading companies in both English and Arabic on a daily basis.