The downfall in UK output and Brexit issues suggest sterling may extend its slump while some troubles are brewing in America, Yohay Elam, an analyst at FXStreet, reports.<\/p>\n
Read: UK GDP shrinks -20.4% MoM in April vs. -18.4% expected, GBP\/USD unfazed<\/p>\n
The UK economy contracted by 20.4% in April, worse than expected, and a horrible figure in absolute terms. Manufacturing output collapsed by 24.3%, a considerable miss in comparison to around 15% projected. The GDP figures have weighed on sterling and may have a longer effect as forecasts are downgraded for the second quarter and the full year.<\/p>\n
The pound has been pounded by Brexit. While both sides agreed to intensify talks, London will formally tell Brussels that it is unwilling to extend the transition period beyond year-end. If negotiations are not fruitful, Britain will fall back to unfavorable World Trade Organization terms in 2021. Mutual accusations about the gridlock have been weighing on sterling.<\/p>\n
Markets have finally taken note of a second wave of coronavirus as an official in Houston said the city is on the precipice of disaster and as a football stadium is being readied for use as a makeshift hospital. Treasury Secretary Steven Mnuchin said the US will not lock down the economy and claimed testing and tracing capacity has improved.<\/p>\n
COVID-19 concerns come on top of pessimism from the Federal Reserve, which sees a return to pre-pandemic output not before 2022. Investors seem unconvinced by the bank's unequivocal commitment to support the economy.<\/p>\n<\/p>\n
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GBP\/USD: Horrible UK GDP and Brexit hassles pounds the pound - FXStreet<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" The downfall in UK output and Brexit issues suggest sterling may extend its slump while some troubles are brewing in America, Yohay Elam, an analyst at FXStreet, reports. Continue reading