Souring international relations to weigh on sterling

4 August, 2020

GBP/USD has been attempting a recovery amid some dollar weakness but rising UK COVID-19 cases and lack of improvement in international relations are set to send sterling down, Yohay Elam, an analyst at FXStreet, reports.

Thursday's announcement of new restrictions affecting around 4.3 million people, talk of a lockdown in London remains prevalent. Whitehall officials claim it is only a worst-case scenario, but the mere idea of slapping new limitations on one of the world's financial capitals is weighing on the pound.”

Sterling is also suffering from the lack of progress in Brexit talks, nor in trade negotiations with the US. International Trade Secretary Liz Truss is in America, for talks with Robert Lighthizer, the US Trade Representative. Expectations remain low.

Sino-American relations are also tense, with the recent row focusing on TikTok and its potential for holding sensitive information. ByteDance, the owner of the social media firm will likely be forced to sell TikTok, potentially to Microsoft. The world's largest economies are also at loggerheads over Hong Kong, where Britain has an interest as well. Any further worsening of relations between Beijing and London could weigh on the pound.

Speculation about the NFP and an update on US COVID-19 cases and deaths have the potential to down the dollar, countering pound weakness.


Source   Presented by OctaFX
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