GBP/USD has been on the back foot due to the US dollar's strength. The UK's gradual reopening may help sterling but the pound has reasons to stay stuck in a dark alley, Yohay Elam, an analyst at FXStreet, informs.
“Casons, theaters – and bowling alleys – are among the establishments that will be able to reopen from the weekend in England. The pound-positive development is simultaneously marred by another COVID-19-related announcement – Britain will require all those coming from France, the Netherlands, and several other countries to quarantine.”
“The ongoing pain for sterling comes from prospects for the job market – Chancellor of the Exchequer Rishi Sunak's statement that ‘many people will lose their jobs’ is still weighing.”
“Brexit talks are set to resume on Tuesday and headlines ahead of the talks may move the pound. However, officials are not expecting any outcomes before autumn.”
“A significant test awaits the economy and markets on Friday – retail sales for July. Government support kept consumption going in July, but the virus may have kept consumers at their homes. Economists expect a slowdown in the recovery. The University of Michigan's preliminary Consumer Sentiment Index for August is also of interest and is set to remain stable.”
“China said it has fulfilled the Phase One trade deal with the US – a statement coming ahead of high-level talks between the world's largest economies. Despite the deterioration in Sino-American relations, both Washington and Beijing would like trade to flow.”
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