GBP/USD has struggled to take advantage of dollar weakness amid a slew of British issues. Sino-American tensions, Brexit speculation, and end of month flows are all in play, FXStreet’s analyst Yohay Elam informs.
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“From Monday, relaxed restrictions will allow groups of six people to meet in England. However, this gradual reopening is of no solace to the pound, which is losing ground against the dollar, yen, and euro.”
“Brexit uncertainty looms over sterling – no news is bad news in this case. The UK’s refusal to extend the transition period beyond year-end raises the risk of falling back to World Trade Organization rules in 2021.”
“Tensions between the US and China have intensified, as Washington pledged to respond to China’s security law, tightening Beijing’s hold on Hong Kong. […] China’s statement about aiming for a ‘peaceful reunification’ with Taiwan also sent chills. President Trump is set to lay out steps in a speech later in the day. While stock markets are on the back foot, the US dollar seems to have relinquished its safe-haven status, for now, allowing only the yen to advance.”
“It is essential to note that Friday is the last day of the month, and may see some last-minute moves ahead of the close. Uncertainty about Trump’s speech may add to volatility.”