GBP/USD (STERLING)
SHORT TERM OUTLOOKS (AUG’2020 – OCT’2020)
United Kingdom full economic activity will be resumed after a vaccine or reliable treatment availability of Covid19.
In Near Term, Demand remains lower as consumer spending less due to unable as well as less willingness to spend. Rising levels of unemployment will reduce wages.
Economic Growth remains subdued thru out 2020.
Weak Demand pressurizing on the inflation front that opens room for the Bank of England more accommodating stance.
As an accommodating stance maintained by BoE, Our belief sterling has rally up to 1.3150 – 1.3350 levels following with 1.23 - 1.25 support levels.
LONG TERM OUTLOOKS (JAN’2021 – JULY’2021) :- There must be two scenarios.
COVID vaccine available on JANUARY 2021
Demand will rise as well as consumer starts spending gradually.
Tourism will be subdued for a longer time frame for precautionary measures.
Inflation remains near the lower levels as Unemployment levels will weaker for 2021.
Investment will gradually increase after 1st Quarter 2021.
We expect GDP will show some concert positive recovery after the 2nd Quarter of 2021.
After vaccination available it will be very promising for business confidence. We expect after getting vaccine BoE will maintain the accommodative stance till June 2021. So, GBP/USD will get support near 1.19 -1.21 levels and get resistance in the range of 1.32 – 1.35 levels.
COVID vaccine available on JUN 2021
Demand will hurt badly and consumer spending will deteriorate that open door for deflationary pressure.
Business confidence will get severe impact; Investment will be held till the market stabilizes.
Market will look for more stimulus.
BoE will maintain the accommodative stance with negative Interest rate anticipation.
On No vaccination till June 2021, that will negative impact on GBP/USD. The Upside will be capped 1.32 – 1.34 levels, but it open door for under 1.19 – 1.20 levels. If this pair will breach 1.19 levels, it can test 1.14 – 1.15 level.
Comments