GBP/USD: More chances than not for cable to crumble


The GBP/USD pair has moved back above the 1.2400 level but Brexit, the Leicester lockdown, and doubts about Johnson's plan may send sterling lower, FXStreet’s analyst Yohay Elam reports.

Key quotes

“Michel Barnier, Chief EU Negotiator, hinted that talks are not going anywhere fast despite the face-to-face meetings and the previously reported new impetus. June 30 marked the official deadline for the UK to ask for an extension of the Brexit transition period that expires at year-end – and that deadline is now gone.”

“Another issue is the coronavirus situation in the UK, with Leicester coming under a new lockdown – the first localized one – amid a cluster of cases. The UK has been shunned out of a list of countries whose people can visit the bloc, despite elevated spending by British tourists.” 

“Hopes for a substantial fiscal boost have faded. Reports suggest that Prime Minister Boris Johnson's grand words ‘Build, build, build’ may only be touting plans already approved. More details are awaited from Rishi Sunak, Chancellor of the Exchequer. The downgrade of first-quarter GDP from -2% to -2.2% makes his job more difficult.” 

“Coronavirus cases remain on the rise in America – with infections hitting records on an almost daily basis. Additional states are slapping restrictions or halting the reopening yet investors still see the upside. That will come to test with two significant releases on Wednesday – ADP's private-sector jobs report and the ISM's Manufacturing Purchasing Managers' Index.”

 

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