GBP/USD has been struggling to hold onto 1.30 amid rising UK COVID-19 cases. The cable is set to suffer from the specter of London lockdown and Brexit impasse, Yohay Elam, an Analyst at FXStreet, reports.
Key quotes
“Liverpool first, London next? The surge in coronavirus cases is not limited to northern England and new measures are likely also in one of the world’s largest financial centers is bracing for a major halt in daily life – which may have more severe consequences on the economy. The latest reports suggest that the capital will enter Tier Two lockdown from Friday night, a blow to the economy.”
“Falling temperatures mean that people stay more indoors, contributing to the spread of the disease, in the UK and in Europe. A lack of warmth is also felt in Brexit negotiations, as EU leaders are set to authorize further talks with the UK – yet without intensifying them. Prime Minister Boris Johnson retreated from his aim to abandon the negotiating table, but only after persuasion and without any breakthrough he can write home about. A lackluster communique from the EU Summit could further weigh on sterling.”
“Treasury Secretary Steven Mnuchin seems frustrated with the piecemeal progress in fiscal stimulus negotiations – and he had been one of the optimists. As the clock ticks down toward the elections, Senate Republicans are focused on the Supreme Court and Democrats are disinterested in granting President Donald Trump a political gift after he rejected their offers. The lower chances of a deal may boost the safe-haven dollar.”
“The greenback may also gain ground if weekly jobless claims disappoint once again. The labor market’s recovery seemed to have stalled and recent figures fell short of estimates. Moreover, a backlog of applications in California may result in a bump up, triggering additional flights to the safety of the dollar.”
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