GBP price, news and analysis:
- GBP/USD, along with other assets seen as inherently risky, are bouncing after US Senators and Trump administration officials reached an agreement on a $2 trillion stimulus package to counter the economic impact of the coronavirus pandemic.
- However, the recovery has been mild so far and there are no signs yet of strong gains.
GBP/USD climbs but remains on shaky ground
A further frail rally in GBP/USD has been prompted by an agreement between the US administration and US Senators on a $2 trillion coronavirus aid package designed to lessen the economic impact of the pandemic. That follows the Federal Reserve’s pledge to buy unlimited amounts of US Treasuries and mortgage-backed securities to provide market liquidity.
These actions in the US have boosted the prices of “risk on” assets such as stocks and oil, as well as GBP. However, concerns remain over whether the Covid-19 virus is under control in the US and further action could yet be necessary, suggesting the GBP/USD rally remains on shaky ground.
GBP/USD Price Chart, Two-Hour Timeframe (March 9-25, 2020)
Chart by IG (You can click on it for a larger image)
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The news from the US has outweighed UK data showing that inflation fell in February, before the coronavirus outbreak, and will likely be followed by further falls in the next few months due to the slump in crude oil prices caused by the pandemic.
For now, aid packages will be far more important for Sterling than domestic economic statistics but will still need to be monitored in coming weeks.
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— Written by Martin Essex, Analyst and Editor
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