GBP/USD: No light at the end of the tunnel for the pound

GBP/USD is pressured again after a wipeout on Wednesday sent it to the lowest since 1985. Londoners are bracing for lockdown while US demand remains robust, Yohay Elam from FXStreet briefs.

Key quotes

“Prime Minister Boris Johnson's about-turn from ‘herd-immunity’ is rapid – and markets are taking note. That move is one of the reasons for sterling's stumble.”

“The strength of the US dollar has been dominant amid distressed selling. Investors are selling stocks and fleeing to the greenback. The free-fall has also been triggered by cascading stops.” 

“The new Governor of the Bank of England has opened the door to more action. More importantly, the next moves depend on government action, both in the UK mentioned earlier, and in the US.”

“Washington is readying a gargantuan $1.3 trillion package. Rising yields – the result of growing funding needs – make the dollar more attractive.”

“In the bigger scheme of things, a lot depends on seeing the light at the end of the tunnel. As Britain is only now entering its lockdown phase, it will likely get worse for the pound before it gets better.”