Since the beginning of June, the GBP/USD has been losing a lot of ground.
On optimistic economic statistics and risk aversion, the US dollar reaches a multi-week high over 92.40.
The pound is under pressure due to slowing growth and political uncertainty.
The US dollar’s strong buying pressure holds GBP/USD advances in check. A number of factors have contributed to the pair’s decline.
GBP/USD is currently trading at 1.3816, down 0.08 percent on the day.
The pair’s downside is aided by the strengthening of the dollar, which is trading near a 12-week high of 92.42. As a result of the extremely contagious Delta version of the coronavirus, investors flocked to safe haven assets.
Positive economic data also boosts USD valuations. In June, the private sector in the United States added 692K jobs, exceeding market expectations of 600K. After jumping by a record 51.7 percent in April, pending home sales data jumped 13.1 percent in May on a year-over-year basis.
Meanwhile, the Fed’s official’s aggressive statements boost anticipation of rising interest rates sooner than planned. President Thomas Barkin of the Richmond Fed stated that the central bank had made “much further progress” toward its inflation goal in order to begin tapering discussions.
Sterling, on the other hand, is dealing with a twin whammy of growth and political uncertainty. The rise in coronavirus infections in the United Kingdom has thrown the economy into disarray, despite the fact that the economy is expected to reopen on July 19. On a year-over-year basis, the UK Gross Domestic Product decreased by 6.1 percent in Q1, as demand and economic activity fell as COVID-19 limitations were tightened. In the first quarter, business mood dropped 10.7%, falling short of market expectations of 11.9 percent.
The political squabble between the EU and the UK over Brexit has continued to hurt sterling’s performance. The UK now hopes to strike an agreement with the EU on extending the grace period for the post-Brexit trading deal in Northern Ireland, according to the latest development.
For the time being, investors are waiting for statistics on the UK Markit/CIPS Manufacturing Purchase Manager Index (PMI), US Initial Jobless Claims, Markit Manufacturing PMI, ISM Manufacturing PMI, and Construction Spending./n
