GBP/USD: Unflattering UK green stimulus erodes sterling

GBP/USD is under pressure as global markets curb their enthusiasm. Furthermore, the UK government’s lackluster green stimulus and PM Johnson’s latest comments are weighing on the pound, as FXStreet’s analyst Yohay Elam notes.

Key quotes

“‘Too many care homes didn’t really follow the procedures in the way that they could have’ – these comments by PM Boris Johnson about old age residencies have caused anger and further eroded the British government’s political credit as the country is attempting recovery from coronavirus.”

“Chancellor of the Exchequer Rishi Sunak will meet lawmakers later on Tuesday and may provide more details ahead of unveiling the government’s stimulus plan on Wednesday. However, the media has already reported that the government is set to allocate £3 billion to the green investment package – falling short of similar pledges from other large European countries. If the rest of the package is underwhelming, sterling could continue suffering.” 

“Stocks surged on Monday amid China’s encouraging of a bull market, falling US coronavirus cases, and an upbeat ISM Non-Manufacturing Purchasing Managers’ Index figure. These three factors are now working in reverse – Beijing is calling for ‘rational’ behavior, pouring cold water on its previous call for buying. America’s COVID-19 cases may have been depressed due to the weekend effect and could see a bump up now. Finally, data may worsen with Tuesday’s JOLTs job openings report, set to show a decrease in hiring in May.”