Rise for GBP/USD as pound aims for 1.2815 and beyond

Justin Freeman

The British pound is likely to come out as one of the major victors in the global decline of the US dollar, analysts say.

Sterling, which has been besieged for months by general fears about the economic impact of the coronavirus as well as specific worries about the potential impact of Brexit, has seen rises to highs in recent days.

Earlier in June, for example, the currency reached the 1.2815 position.

Now, it is expected by some analysts to return to this former high point.

Some are also forecasting that there may be even more of an upward trend as time goes on.

The currency may, for example, find itself at the key level of 1.3200 at one stage.

Several factors have contributed to this change.

Brexit is one of the most significant – the two sides are working towards a deadline of the end of 2020 in order to iron out thorny trade-related issues and strike a trade deal.

While worries over whether this would materialise has held back the pound in the past, it is now believed that there could be some progress on the cards.

Over the previous fortnight, there has been some progress made in talks, though this remains negligible.

In terms of the British economic calendar, meanwhile, there is not much scheduled in for this week.

One major event is likely to be the mortgage approvals metric for June, which is due out at 8:30am GMT on Wednesday.

This is due to show a change from just over 9,000 to 35,000.

When a currency experiences a sparse economic calendar, it tends to mean that events in other major economies are likely to be responsible for any market moves.

In the US, for example, this week will see a meeting of the country’s Federal Reserve.

The Federal Open Market Committee will meet to decide on the central bank’s latest tranche of responses to the economic consequences of the coronavirus pandemic.

It is widely forecast to show that it is willing to inject further liquidity into the American economy if it is required.

This, in turn, is likely to leave the greenback floundering even further in the forex markets, leaving the pound free to potentially run up the middle.

The picture could be distorted, however, if the US Congress manages to agree a stimulus package in time.

One proposal on the cards is to deliver a four-figure sum of cash to each member of a huge swathe of the American population in an attempt to get the sluggish, pandemic-affected economy moving once again.

If this materialises, it may well be interpreted by the markets as a reason to give the greenback another chance.

Ongoing deadlock between Republicans and Democrats, however, could leave traders convinced that no stimulus package will materialise.


Justin Freeman

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