- £30 Billion Stimulus Package
- U.K Property Sector Rebound
- Brexit Hopes
GBP/USD touched three-week highs, Thursday morning, as a confirmation of a £30 billion stimulus package that fuelled a bid tone around the Pound. A bounce back from one-month lows has continued to gather steam, amidst hopes of economic recovery following the reopening of the U.K economy, in the aftermath of the COVID-19 fallout.
British Pound Bounce Back
The GBP/USD spiking to 1.264 came at the backdrop of the U.S dollar weakening across the board amidst growing hopes of economic recovery.
Time : 07-09-2020
Pivot : 1.2588
Technical View : Long above 1.2608
Target : 1.2628 – 1.2684 – 1.2715
Comments : Bullish
Last Price : 1.2637
The catalysts fuelling the bid tone around the cable is the unveiling of a $30 billion stimulus package expected to spur economic recovery. The U.K. economy is on a recovery path after more than three months under lockdown in the coronavirus pandemic aftermath.
Traders pushed the Pound higher against the dollar on the government approving a much bigger stimulus package. The stimulus package should reinvigorate key sectors of the economy that had come to a standstill at the pandemic’s peak.
The property market is already a buzz of activity even though it remains at depressed levels. According to the Royal Institution of Chartered Surveyors, 61% of its members registered a 61% increase in new buyer enquiries in June. The RICS house price balance also improved to -15 in June from -32 in May.
Reports that the U.K and the EU are close to finding a landing zone as part of ongoing Brexit talks also continues to support the Pound strength against the dollar. Standing in the way of the Pound registering further gains is a resurgent dollar.
The dollar is likely to strengthen with a spike of tensions between Washington and Beijing over Hong Kong. A spike in coronavirus cases in the U.S to highs of 3 million with a new daily record of 60,000 new cases could also fuel risk aversion in the market, sending the dollar higher.