GBP's Exchange Rate Is Resistant to Decline

The British pound has been sluggish recently, being among a group of non-US currencies that suffered general pressure due to risk aversion sentiment caused by WTI's decline into negative areas. However, the pound has now shown obvious resistance to decline.

Despite Markit's service industry PMI in April of 12.3, which was much lower than the expected 27.8, the pound did not show a sharp decline, indicating that the market partially digested the epidemic's shock on Britain's economy. We believe that pound s current exchange rate at an extremely low range indicates the currency has little room for further declines. As the global economy gradually recovers, the pound may rebound significantly.

The negotiators of the United Kingdom and the European Union began week-long consultations to discuss the relationship between the two countries after the Brexit, including trade issues. As the epidemic persists, the possibility of the UK applying for an extension of the Brexit transition period is also increasing. The market still needs to pay close attention to how the progress of related matters evolve.

GBP/USD daily pivot points: 1.2406-1.2418

S1 1.2371 R1 1.2465

S2 1.2506 R2 1.2318