GBP/USD: Reality check to push sterling lower
|GBP/USD has been on the back foot as weaker parts of economic indicators take priority. US Retail Sales, BoE speculation and coronavirus figures are of interest, FXStreet’s analyst Yohay Elam reports.
Key quotes
“The UK unemployment rate remained at 3.9% in May – an excellent level in absolute terms and beating expectations once again. The Claimant Count Change also surprise with a drop of around 28,000, instead of rising. However, average earnings are now down 0.3% year over year, ending an era of pay rises. GBP/USD has been extending its losses following the publication, focusing on the negatives and the potential for disinflation.”
“Andrew Bailey, Governor of the BoE, told MPs that interest rates will remain depressed for at least two more years. The BoE's borrowing cost stands at 0.10% and setting a negative rate is still ‘under review.’ Further speculation about going negative could send sterling lower.”
“Will US retail sales also disappoint? Figures for June are forecast to reflect an ongoing recovery as the US continued its reopening early on before some states suffered from a resurgence of the virus. Given the recent reactions, investors may find one piece of data or another to worry about.”
“While the UK coronavirus curve continues falling, infections and deaths in the US are on the rise. Record cases have been reported in California and Texas, and other states are also struggling to keep up. America's cases have surpassed 3.5 million and mortalities top 137,000.”
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