Pound falls after news of UK PM Johnson testing positive for the coronavirus

Technical Analysis

Author: Justin Low | gbpusd

An interesting reaction

GBP/USD M1 27-03
The pound actually fell on the back of the headline, with cable dropping from 1.2290 to 1.2185 in under 15 minutes as traders scramble on what to make of the news.

Quite frankly, I wouldn't regard this as a major reason to sell the pound - especially since Johnson will still be able to carry out his job functions to a certain degree - and since the UK government should still be able to function well during this period.

There is no doubt that there are risks involved with the current situation, but I wouldn't say that this is a major turning point. If this were to take place in another country where a political leader ruled with an iron fist, then perhaps it is a different story.

For now, cable is also struggling to try and break above the 50.0 retracement level @ 1.2306 - the key line in the sand - with the dollar also holding its ground so far today.

I'd say those are more plausible reasons to keep pound gains in-check, rather than selling because Johnson has contracted the virus - at least for now.

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