GBP/USD has been extending its gains, currently sitting at 1.2586, amid an upbeat market mood. The next steps depend on UK Prime Minister Boris Johnson who has several fronts, as FXStreet’s analyst Yohay Elam notes.
“Talks between the EU and the UK continue via video and the current round is set to end on Friday. Brussels has its hopes on a dramatic intervention by Johnson, similar to his agreement to allow a customs border between Northern Ireland and the rest of Britain. The PM will meet European Commission President von der Leyen later in June.”
“With the focus on protests in the US, China's move to grab more power in Hong Kong and protests in the city-state have faded from the headlines. However, Johnson has been raising his voice against human rights violations in the former colony. That may aggravate relations with Beijing, at a time that Britain needs more global partners following Brexit.”
“Coronavirus statistics have continued improving in the UK, but the pace remains frustratingly slow. Contrary to American leadership, UK officials expressed concern. However, the news may cause discontent, joining the anger about the PM adviser's violation of lockdown rules he helped devise. That limits the government's maneuvering space.”
“Protests against racial discrimination continued in the US, albeit with a far more peaceful tone. Stock markets shrugged off the unrest as US states continue opening. Alongside support from the Fed, investors remain optimistic and sell-off the US dollar.”
“The recovery of the world's largest economy will be tested later on Wednesday with two critical releases. ADP's private-sector Nonfarm Payrolls are set to show a loss of around nine million positions, and the ISM Non-Manufacturing Purchasing Managers' Index is estimated to have advanced in May.”
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