- Brexit Talks Optimism
- Economy Bounce Back Concerns
- Construction PMI Outlook
GBP/USD raced to two-month highs amidst a glimmer of hope around BREXIT talks. The British Pound also benefited from a weakened dollar that remains on the defensive as world economies bounce back from the COVID-19 pandemic.
The Pound matched higher on early Wednesday trading session, building up on gains accrued on Tuesday. Traders sentiments around the currency has improved significantly after Britain indicated a willingness to compromise on a trade deal as part of BREXIT negotiations before the end of the month.
Time : 04-06-2020
Pivot : $1.2561
Technical View : Long Above $1.2581
Target : $1.2601 next 2 targets are $1.2653 and $1.2686
Comments : Weak Bearish To Neutral
Last Price : $1.2512
Technical View : Short below $1.2541
Target : $1.2521 next 3 targets are $1.2492, $1.2469 and $1.2415
Trade negotiations between the EU and the U.K are on a homestretch as part of a third and final session this week. The U.K ruling out an extension to the current standstill continues to boost sentiments that it is ready to ink a deal and avoid a no BREXIT outcome.
U.K’s failure to reach an agreement before the end of the week could force traders to await the outcome of a final meeting scheduled for later in the month. Brexit discussions should continue to weigh in on the Pound that has rallied in recent weeks on the hopes of a deal.
Economy Bounce Back Concerns
Brexit optimism has helped shrug off concerns about weak economic data in recent weeks that have raised serious concerns about the U.Ks economy. Just like other economies around the globe, the U.K is still trying to bounce back from the COVID-19 fallout that brought key sectors of the economy to a standstill.
In recent weeks there has been talk of negative interest rates in a bid to kick start an economy that is struggling to bounce back from the COVID-19 pandemic? However, Bank of England Governor, Andrew Bailey has downplayed the calls.
In addition, the British Pound has benefited from a weak U.S dollar in recent weeks. The Greenback plummeting from above the $100 mark in the dollar index has had a hand in the GBP/USD pair racing to two months highs.
Looking ahead, dollar strength will once again be on the spot with the release of U.S Initial Jobless claims. Britain’s Construction PMI for May is expected to show an improvement to 30 from 8.2. Failure of the PMI to match or beat expectations could trigger weakness in the Pound sending the GBP/USD pair lower.