GBP/USD: Bulls have fewer reasons to cheer but are not defeated
|GBP/USD has been retreating from the BoE-inspired highs amid Sino-American tensions. Worries about NFP go both ways, weighing on bulls, but the optimistic mode can return once the market digests US jobs figures, FXStreet’s analyst Yohay Elam briefs.
Key quotes
“‘The furlough program is not sustainable in the long-run’ – the words of Rishi Sunak, Chancellor of the Exchequer, provide a reminder that the UK's economic success has its limits, weighing on the pound.”
“America's jobless rate was 11.1% as of June and a minor decline is on the cards for July. Economists expect the world's largest economy to have gained 1.5 million positions last month, yet real estimates have likely declined. The NFP could go either way – a gain or a loss of jobs. If the report shows a substantial hit to employment – due to the resurgence of coronavirus – the dollar has room to decline.”
“President Trump has hit TikTok and WeChat – two prominent Chinese tech firms – with strict restrictions on their ability to doing business in the US. The administration is worried about the usage of data – and the president would probably like to talk about China and not his mishandling of the virus.”
“The UK government is allocating £355 million pounds to customs controls between Great Britain and Northern Ireland – a customs border in the Irish Sea. PM Boris Johnson had been denying the need for such checks and this move is coming under criticism that adds to his woes as the coronavirus crisis continues.”
“GBP/USD has already more than erased gains related to the BoE's optimistic message. The ‘Old Lady’ upgraded its 2020 growth forecasts and hinted negative rates are off the agenda for now. That upbeat tone may return to support sterling once the dust settles from the Non-Farm Payrolls.”
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