GBP/USD hits fresh five-month low under 1.2500 as USD soars

• Pound extends slide versus greenback, losses momentum versus CHF, EUR and JPY. 
• GBP/USD down 300 pips on Thursday, heads for the lowest close since October 10. 

The GBP/USD continued to slide and reached a fresh five-month low at 1.2489 before rebounding modestly. As of writing, was trading at 1.2530, off lows but still under pressure. 

The key driver was US dollar strength. The greenback emerged on Thursday as the only safe-haven, rising even versus the yen. The DXY is up 1.60%, above 98.00 at the highest level since the beginning of the month. 

Rate cut expectations from the Federal Reserve are not hitting the US dollar, which demand surged as investors rushed for liquidity. “Given the current market panic and the slow progress in effective policy measures by the federal government, the FOMC is likely to decide to cut the lower bound of the target range for the federal funds rate back to zero this month”, explained analysts at Rabobank. 

Main US stock indexes are falling around 8% on another turbulent day. On Wednesday US President Trump imposed a 30-day travel ban on European visitors. As more and more events get canceled around the world, concerns about the economic impact of coronavirus rise every hour. 

The pound was affected by the intense risk aversion that reigns. Among main European currencies, it was being the worst performer. It experimented a modest recovery after ECB Lagarde’s press conference but it lost momentum again as equity prices in Wall Street approached daily lows. 

Technical level