The attitude of the world's central banks to the risk of the economic impact of the Corona COVID-19 virus outbreak dominates financial news today (3 / March). The top official of the UK central bank (BoE) signaled it would make monetary easing to counter the potential economic slowdown. Because of this announcement, the Pound only rose limited though supported by brilliant PMI Construction data and the beginning of more harmonious trade negotiations.

Trade negotiations between Britain and the European Union officially began yesterday in Brussels. The Guardian reported rumors that the European Union had dumped hopes that Britain would align itself with its regulations after PM Boris Johnson released documents containing outlines of trade negotiations.

This raises hopes for an agreement between the two camps so that GBP / USD has risen at the start of the European session. Moreover, the UK's economic conditions are comparatively resilient compared to some countries from other major currencies such as Japan and the Eurozone. Construction PMI data jumped from 48.4 to 53.6 in the report this afternoon, crossing the threshold of contraction-expansion divides firmly.

However, there are still many crucial issues that have not found a clear solution, such as EU fishermen's access to British waters and legal procedures for resolving trade disputes. Rhetoric fights over the next few months have the potential to continue to weigh on the British economy and the Pound. The GBP / USD rebound attempt was also hampered by the dovish latest BoE statement.

Pruning Interest Rates Will Be Done Soon

In testimony before MPs, BoE Governor Mark Carney flatly rejected the idea of negative interest rates. However, he said market participants could expect a policy response to the Coronavirus disruption in the form of a monetary and fiscal policy mix.

Following the statement, the market immediately calculated the probability of a rate cut of 25 basis points to the 0.50 percent level at the BoE policy meeting on March 26.

"The BoE statement gave a signal that interest rate cuts will be made this month, but do not expect an easing of more than 25 basis points. The weakening of Sterling has softened the effect (global economic problems) for (domestic) economic conditions, and if extended, will push inflation to over the target.

The latest credit and money data show the British economy is gaining momentum at the beginning of this year, "said Samuel Tombs, head of the British economy at Pantheon Macroeconomics.

Pounds Are on the Loss Side Due to Leaps from Several Central Banks

Some central banks have leaped to react to the threat of coronavirus outbreaks and the pound is on the side that suffered losses because of it. The Bank of England has guaranteed it will take all the steps necessary to protect stability so that it sends the pound back down. GBP / USD is trading near 2020 low again.

On Friday, the GBP / USD pair rebounded when the Federal Reserve made an unusual take and issued readiness instructions to cut interest rates through a message. The message issued by the Fed was able to help the global market to stabilize on Friday and experience an increase on Monday, despite the high tension.

In February the final mark of the UK manufacturing PMI came in at 51.7, and decreased slightly but was still above the level of 50 which separates expansion from contraction. However, the Chinese PMI collapsed to a record of worse than the 2008 financial crisis with a coronavirus paralyzing the economy.

GBP / USD is suffering from a downward momentum with the nearest "support" waiting at 1.2730 which if successfully passed will continue to 1.2705 and then 1.2600. While the closest "resistance" is at 1.2850 which, if successfully passed, will continue to 1.2920 and then 1.2950.