​GBP/USD Poised for Slump Despite Later Rebound

WikiFX News (27 Nov.) - The Office for Budget Responsibility (OBR) lately forecast that the UKs GDP was on track for its worst year on record. As a result, GBP/USD received some pressure for a time but approached to 1.34 barrier after reclaiming the lost ground. Nonetheless, the pair remains prone to slumps.

The OBR released a “Fiscal Sustainability Report” recently, pointing out the UK‘s GDP in 2020 is expected to shrink by 11.3%. This set the UK’s largest economic decline in 300 years.

The OBR also believes that the UK‘s fiscal deficit this year (£394 billion) will reach its highest value since the end of World War II, attributed to the Covid-19’s economic shocks.

Such a forecast, however, is not surprising. GBP/USD can hardly find any substantial obstacles amid lower expectations for the UKs GDP. A rebound to 1.3398 once appeared on the upbeat Brexit prospects as well as the ongoing pressured USD

But it should be noted that the DXY has fallen to yearly lows, indicating a rally is on the cards. Any changes in Brexit may drag GBP/USD down sharply.

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Chart: Trend of GBP/USD