RedFX Snap: GBP hammered, USD demand continues

GBP is being hit very hard today, hitting Oct16 levels vs USD (in the midst of a flash crash) – one commentator (on FXStreet) says “GBP … indicating extreme oversold conditions, but abnormal conditions mean it could continue lower”.

GBP/USD hovers around 1.1900, and next key levels are 1.1800 and 1.1700.

Reasons abound, but the UKs lack of response and a flight to the USD seem to be the main reasons in the market. With EUR/USD falling from 1.1200 to 1.0950 at the same time, the USD demand is clear. Trump’s approval rating has declined as the onset of Covid-19 has continued (44.6% approval on 18th Feb vs 42.8% on 17th March .. the March figure equates to a 10.1% disapproval rating which is meaningful), and Biden has made stunning progress in elections.

As GBP/USD extends through low levels, GBP/EUR is well under 1.1000 and we are looking at 1.0800 levels at the moment.

EUR Headlines:
 "We are experiencing a major economic shock," told Isabel Schnabel, Member of the Executive Board of the European Central Bank, Die Zeit newspaper and reiterated that the ECB is ready to act quickly if necessary.  

"It seems like all market participants have understood the components of the ECB's asset purchase programme," Schnabel added. "The ECB is prepared to do everything within its mandate to counter the market turmoil."

Other EURO headlines:

"Likelihood of a recession significantly increased."

"We are watching current situation very closely to be able to react quickly to new developments."

"The ECB is looking closely at credit markets for companies and governments."

"We need European solidarity, including financially."

"Monetary policy cannot solve this crisis alone."

CAD: USD/CAD hits new multi-year highs through 1.4300 as oil continues to decline