Tension Mounting Over UK Lockdown

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Trump Wishes Johnson Speedy Recovery

UK PM Boris Johnson is continuing his recovery from coronavirus this week at his official country residence, Chequers.

While the PM is still not back on official government work, his deputy Dominic Raab is standing in for him. Meanwhile, BoJo has been receiving updates from senior colleagues.

He has also reportedly spoken with President Trump on the phone. Trump called Johnson to wish him a speedy recovery.

According to a Downing Street spokesperson, the two leaders discussed a united effort from both their countries in fighting the ongoing threat from the virus. They agreed on the need for a “coordinated international response”.

PM Said To Favour Keeping Lock-down in Place

Over the last few days, there has been extensive media coverage regarding the prospect of a lockdown extension. This would go beyond the current May 7th date, on which the next review is scheduled.

Johnson is said to be far more cautious regarding the virus since his diagnosis. He is now more in favor of keeping lockdowns in place for longer.

The main argument for extending the current lockdown is to avoid a dangerous second wave of infections. Health authorities warn this could easily occur if hospitality and recreational venues re-open too soon.

Chancellor Wants Lockdown Lifted

However, others in government, such as chancellor Rishi Sunak and Michael Gove, warn that extending the lockdown could have catastrophic implications for the UK economy.

UK data has fallen sharply lower in recent weeks, reflecting the loss of activity amidst the ongoing lockdown.

UK Recession Warning

The BOE has warned of the imminent recessionary risks as a result of the virus. OBR warned that the UK could suffer a 35% contraction in GDP through to June.

Indeed, despite the added caveat that the UK will begin recovering as soon as the lockdown is lifted, projections are divided.

BOE Warns Over Speed of Recovery

Ben Broadbent, Deputy Governor of the Bank of England warned this week that the recovery in the UK could likely be slower than first expected, saying:

“The question that we will have to think about is whether behavioural responses of people mean that even if the government-imposed lockdown is lifted, demand may remain weak in some areas just out of people’s natural caution.”

GBPUSD Fails At Key Resistance

GBPUSD

The rally in GBPUSD last week ran into supply at the 1.2586 resistance level which has since turned price lower again. The market is now soon to test interim support at the 1.2190 level which, if broken, will put the focus back on a test of the 1.1929 support.

If 1.2190 holds, however, expected consolidation to continue with focus back on a further test of the 1.2586 resistance.

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