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GBP/USD continues shrugging off UK concerns and takes full advantage of the upbeat market mood and the sell-off of the safe-haven greenback. UK tax developments and the ISM Manufacturing PMI are eyed on Tuesday, Yohay Elam, an analyst at FXstreet, informs.

Key quotes

“The latest cheerful news for investors has come from AstraZeneca – based in Britain, but on course to launch a 50,000-strong trial for its coronavirus vaccine candidate in the US. The project is considered one of the world’s most advanced ones and hopes for resolving the crisis are sending stocks up and the dollar down. Yet most importantly, the underlying reason for the current trends comes from the Fed. The effect of the bank’s dovish shift – allowing inflation to overheat before raising rates – continues in full force.” 

“The ISM Manufacturing PMI is set to guide the dollar on Tuesday. This forward-looking gauge of the industrial sector also serves as a hint toward Friday’s all-important Non-Farm Payrolls.”

“Back in Britain, the final Markit/CIPS Manufacturing PMI edged lower from 55.3 to 55.2 points in August. More importantly, Brexit talks remain stuck but investors seem to have priced that in. It seems that only an announcement of a breakup of negotiations could send sterling lower, but that seems unlikely.”

“Rishi Sunak, Chancellor of the Exchequer, is set to announce means to plug a hole in the government’s coffers – tax hikes. According to some reports, he will announce a levy on gasoline, while others expect an increase in corporate taxes. An announcement is due out as early as Tuesday. The higher the toll, the worse for sterling. A minor increase could allow for further gains.”

 

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