With public holidays taking place, it has been a quiet start to the new trading week. The main event of the day by most accounts has been the statement and answer session provided by Dominic Cummings, Chief Advisor to UK Prime Minister Boris Johnson following hysteria that he broke the rules of the UK lockdown.
Cummings has been ridiculed by UK media throughout the weekend and although by most accounts the outlook is that he will not be leaving his position, let’s take a look at a few hypothetical outcomes for the GBP depending on each potential outcome:
Can the GBP move higher should Cummings no longer work for Boris Johnson? It is likely. Although political uncertainty is not something that investors like to hear, this situation has put a very negative spin on how compliant UK officials are towards the same rules that are issued by the same Government. Cummings has also been associated as one of the masterminds behind Brexit and a key-figurehead in the initiative. Should Cummings no longer work for the UK PM, perhaps Brexit will not happen as fast or some of the tough-talk narrative that Downing Street has issued would be watered down.
Can the GBP move lower should Cummings remain in his position? Again, another likely outcome and not something to completely discount. The UK is in the midst of a public health crisis, with the second higher number of fatalities to coronavirus worldwide. What if this takes the attention away from the UK fighting the disease? Or what if others within the UK now ignore government advice and break social distancing guidelines? Just imagine if the UK has another spike just when there was hope that it passed the peak.
As it stands, GBPUSD on the Daily timeframe suggests the pair is in somewhat of a consolidation without clear conviction on which way the pair could head next.
However, the most recent candlesticks provide a picture of continued lower lows in place and this could be an indication of a resuming downtrend. If GBPUSD hypothetically closes below 1.2150 today, it will be monitored whether another break for 1.21 or even below 1.20 is possible over the remainder of the month.
(GBPUSD Daily FXTM MT4)
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