GBP/USD: Brexit, coronavirus and protests to pressure the pound

GBP/USD has been holding onto high ground, currently trading just below the 1.27 mark. UK factors may weigh on the pound, while American developments may have a mixed impact on the dollar, according to FXStreet’s analyst Yohay Elam.

Key quotes

“The harsh words of Michel Barnier, Chief EU Negotiator, reflects the deadlock in talks about future relations between Brussels and London. Barnier's presser on Friday took only a minor toll on the pound, however, the specter of the UK falling to World Trade Organization terms may still weigh on the pound.”

“Another factor that may pressure the pound is Britain's slow reopening. Coronavirus statistics have been falling at a slower pace than continental countries. While moving more slowly may reap benefits later down the line, the economy is suffering in the immediate term.” 

“Massive protests seen in the UK over the weekend are a bearish factor. Inspired by demonstrations in America, Brits came out to the streets in a call to end racial discrimination. The PM has already been losing support due to his handling of the disease and discontent over racial discrimination piles up.” 

“Large demonstrations were also seen over the weekend in the US, and may indirectly have a positive effect on markets. Lawmakers have reportedly accelerated talks on another fiscal relief package. That may boost stocks and weigh on the dollar.”