GBP/USD is struggling to take advantage of the dollar’s weakness. Inconclusive Brexit talks and fears of a lockdown in Birmingham are stemming sterling’s recovery, according to FXStreet’s analyst Yohay Elam.
Key quotes
“Birmingham – a large English city – is on the brink of lockdown. The British media has been reporting about illegal parties as one of the reasons for the rise in coronavirus cases in the city.”
“The British government is struggling to control COVID-19 – and how to reopen schools. Confidence in the government’s policies is dropping, lowering the chances that Brits follow the rules. Given the gradual increase in infections, the intention to discontinue the successful furlough scheme is reconsidered. The program is set to expire in October and may send the economy over a cliff. Chancellor of the Exchequer Rishi Sunak has repeatedly said the scheme is unsustainable but may change his mind.”
“Another precipice the UK could figuratively fall off is Brexit – another round of talks has ended without progress. The mutual announcements sent sterling down on Friday and continue weighing on it. The transition period expires at year-end and talks could come down to the wire.”
“Coronavirus and Brexit have hamstrung GBP/USD, despite dollar weakness. The safe-have greenback has come under pressure amid hopes for ushering a coronavirus vaccine. President Donald Trump’s push for approving plasma treatment is also supporting stocks and dragging the dollar down.”
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