GBPUSD by UK COVID TimelineThis is the timeline of major COVID related events in the UK and the corresponding chart for GBPUSD. The lower chart is of moving averages of US and UK new COVID cases.
Since the start of COVID and an initial big drop, GBPUSD has seen strength after strength, with a number of significant bottoms coinciding with major events in the UK political landscape.
Put another way, it would appear that several of the government reactions to COVID in the form of Lockdowns and social restrictions have acted as catalysts for significant moves in the Pound.
This can also be seen on the following chart, which is a combination of GBPUSD, GBPCAD AND GBPAUD (these major pairs chosen as they all trade between 1.3-2, giving a roughly similar weighting).
The 1st National Lockdown, introduction of Local Lockdowns and introduction of Hospitality Curfews all created almost perfect short term bottoms for GBP.
We can also see that since the government restrictions have eased - and the subsequent breakout of Omicron variant with little government response - GBP has seen a steady decline.
With new COVID cases reaching back to back all time highs in the UK the general sentiment is that a lockdown, "circuit breaker" or tier system being reintroduced is inevitable. If history tells is anything to go by this is likely to be introduced after Christmas as politicians fear the public backlash if they were to ruin Christmas for families.
Based on this history, if we are to see new strict measures introduced after Christmas, one could potentially view that as a signal to go long GBPUSD or other GBP pair, as the pound has generally responded positively to the introduction of new measures.
