The GBP/USD currency pair’s decline was fuelled by rumours that the UK would close its borders completely due to rising Covid cases
The Sterling pound fell against the dollar amid a deluge of disappointing UK macro reports that painted a discouraging picture of the country’s economy. The GBP/USD currency pair was also weighed down by the prospect of the UK coronavirus lockdown measures being extended for more months.
The GBP/USD currency pair fell from a high of 1.3735 in the Asian market to a low of 1.3635 in the early American session.
The currency pair’s initial decline was fuelled by rumours that the UK would close its borders completely due to rising coronavirus cases, which would derail the economy further. The release of the UK retail sales report for December drove the pair lower as all prints missed consensus estimates. According to the Office for National Statistics, the UK’s headline retail sales grew 0.3% versus the expected 1.2% expansion.
The UK’s public sector’s net borrowing figures were higher than expected by coming in at 33.37 billion versus the expected 32.28 billion adding to the pair’s woes. The downbeat Markit/CIPS UK services PMI, which came in at 38.8 missing analysts estimates of 45 further weakened the pound, as did the weak UK Manufacturing PMI.
The release of the upbeat Markit US manufacturing and services PMI prints also fuelled the pair’s decline. Boris Johnson‘s comments that the current UK lockdown measures will stay in place until infection and death rates decline also weighed on.
The currency pair’s performance over the weekend is likely to be affected by geopolitical events and US dollar dynamics.
The GBP/USD currency pair was trading at 1.3678 having fallen from a high of 1.3735.
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