GBP/USD: Investors supports further gains for now

GBP/USD has been advancing amid the new fiscal stimulus plan and the upbeat market mood but concerns about coronavirus, Brexit and the US labor market may slow sterling’s advance, FXStreet’s analyst Yohay Elam informs.

Key quotes

“Markets seem content with the government’s £30 billion stimulus package. Chancellor of the Exchequer Rishi Sunak also presented a job retention plan to get people back to work, and retraining programs for the young. Perhaps more importantly for investors – he clarified that ‘the job is only beginning.’ Perhaps after seeing the impact of the special stimulus – and the reaction in financial markets – he will come up with an even greater injection of funds.”

“Angela Merkel, Germany’s leader, repeated the need to prepare for a no-trade-deal Brexit. Talks – including a dinner between top negotiators – has failed to yield a breakthrough.” 

“Ongoing efforts to discover a vaccine and develop a cure are underway, with the latest announcements of progress coming from Emergent BioSolutions and Moderna. Nevertheless, a solution may take long months, and the US coronavirus situation continues deteriorating. Infections have officially topped three million while hospitals and laboratories are becoming overwhelmed in several states. Unfortunately, the death graph is also rearing its ugly head.”

“Has the recent coronavirus resurgence hit the labor market? The recent Nonfarm Payrolls report for June did not capture the uptick, but perhaps weekly jobless claims will show a change.”