GBP/USD: Brexit hopes to outweigh rising COVID-19 cases
|GBP/USD is rising on hopes that PM Johnson allows for more Brexit talks but rising coronavirus cases and Manchester's rejection of new measures may limit sterling's rise. US fiscal stimulus and retail sales are also of interest, Yohay Elam, an Analyst at FXStreet reports.
Key quotes
“If Prime Minister Boris Johnson resumes talks and is ready to compromise, GBP/USD has room to recover and even rally.
On Thursday, EU leaders allowed for more negotiations – but refused to intensify them. Moreover, they said that the ball is now in Britain's court, triggering angry responses from London. David Frist, Britain's chief negotiator, expressed disappointment. Moreover, it is essential to remember that Johnson made a last-minute concession last year – agreeing to have a customs border in the Irish Sea – when seeking the divorce deal. He may go down that path again. That could further boost the pound.”
“Johnson has another issue to deal with at home – COVID-19 cases are surging and his tiered policy is coming under scrutiny. Andy Burnham, Manchester's mayor, rejected the government's desire to put his city under Tier Three restrictions, the top level. The mix of worrying levels of infections and the lack of trust in the central government are hobbling sterling's advance.”
“Across the pond, stimulus talks remain stuck as House Democrats want a generous $2.2 trillion package, the White House is willing to agree on over $1.8 trillion, and Senate Republicans want only $500 billion – at least ahead of the elections.”
“Initial jobless claims disappointed with an increase to 898,000 for the week ending October 9, and now the economic calendar features a more significant publication – retail sales figures for September. Statistics for August fell short of estimates, partly due to a lapse of government support.”
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