The British pound today crashed to new lows against the US dollar as investors fled the pound amid widespread coronavirus fear in the United Kingdom. The GBP/USD currency pair’s woes were associated with investors’ adverse reaction to the British government’s delayed response to the coronavirus pandemic.
The GBP/USD currency pair today fell from an opening high of 1.2129 to a low of 1.1828 in the early North American session and was headed lower at the time of writing.
The currency pair’s sell-off was primarily driven by investor fears that the worst is yet to come for the UK as coronavirus cases rise. Investors considered the government’s measures as being inadequate to contain the spread of the coronavirus. Boris Johnson‘s government has been criticised for waiting too long before announcing stringent containment measures such as the limited movement of persons and banning public gatherings. The UK is yet to announce school closures amid rising coronavirus infection even as a top UK COVID-19 expert developed symptoms of the disease. Investors are expecting the situation in the UK to worsen given that top scientists hope a vaccine/cure to become available in Summer 2020.
High demand for the US dollar, which is the world’s only reserve currency, also contributed to the pair’s decline as the US Dollar Index crossed the 100 thresholds. The empty UK dockets could not help the cable, which was at the greenback’s mercy.
The currency pair’s future performance is likely to be affected by geopolitical events and US dollar dynamics.
The GBP/USD currency pair was trading at 1.1867 as at 12:49 GMT having fallen from a high of 1.2129. The GBP/JPY currency pair was trading at 127.57 having dropped from a high of 130.32.
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