GBP/USD: Prospects of Covid-19 cure unable to lift the pound

There is more room to the downside for GBP/USD than to the upside as hopes for a coronavirus cure are insufficient to boost sterling as the cable has other issues to grapple with such as Brexit or geopolitical tensions, FXStreet’s analyst Yohay Elam briefs.

Key quotes

“Dexamethasone, a cheap steroid drug, has shown to reduce mortality from COVID-19 by up to a third according to a broad randomized controlled study conducted by the University of Oxford. That is undoubtedly good news.” 

“The UK's coronavirus curve is moving down – yet frustratingly slowly. The government is loosening the lockdown at a snail's pace in comparison to its peers at the continent and demands a 14-day quarantine on incoming visitors– all but killing the tourism sector.” 

“Despite Prime Minister Boris Johnson's optimism about accelerating Brexit talks – or ‘putting the tiger in the tank’ in his words – talks may drag on for longer. According to a report in Germany, negotiations will only heat up after the summer.”

“The increase in COVID-19 cases in the US Sn Belt and Beijing is causing concerns. China is also involved in a border clash with India in the remote Galwan valley up in the Himalayas. Efforts to de-escalate are underway and could weaken the safe-haven dollar.” 

“Another geopolitical conflict involving nuclear weapons is in the Korean peninsula, where both Pyongyang and Seoul have heightened their rhetoric after the North's bombing of a liaison office on the border. High tensions keep the dollar bid in this case.”