Covid-19 continues to bring damage to the UK economy and the government is responding with fiscal policy. The United Kingdom is currently in a second lockdown, and new case numbers and the national death count is quickly rising.
As the covid-19 pandemic continues to spread, British Chancellor Rishi Sunak has decided to postpone plans of tax increases in the March budget due to the continued economic crisis caused by the pandemic. It was also mentioned that the tax increases will only be delayed until August 2021. The change in tax policy provided the GBP with a small boost, however uncertainty regarding the UK’s 2021 economic recovery overshadows the pound.
There have also been reports regarding the £4.6 billion ($6.2 billion) support package, which is in place to support small businesses after they struggle through Britain’s third lockdown, of being extended past the April deadline which is currently the expected end date. This stimulus would give the GBP a boost and provide much needed support to the the UK’s economy as they overcome the Covid-19 downturn.
Despite this, the RSI shows upside momentum for GBP/USD. The next support level is at the 1.331 mark, failing that the trendline lies just below.