GBP/USD Trades Steady, Benefits From Improving Market Sentiment
Arslan Butt • 1 min read
GBP/USD is trading somewhat steady after having made gains in the previous session as a result of an improvement in the risk appetite in markets as traders looked forward to countries resuming economic activity soon. At the time of writing, GBP/USD is trading at around 1.242.
Traders turned more optimistic about the Pound after PM Boris Johnson resumed work on Monday after recovering from coronavirus. Although he remains non-committal about reopening the economy, expectations are rising after Britain reported a slowdown in the number of new cases and hospitalizations in recent days.
GBP/USD also benefited from a weakness in the US dollar as traders switched towards riskier instruments, including stock markets which also marked a gain in the previous session. Even as other countries, including Italy and Australia look to restart economic activity, Johnson has not yet revealed his plans for Britain, but has cautioned that any easing should be implemented carefully so as not to risk a resurgence in cases.
However, on Monday, weekly futures data indicated that the market turned bearish towards the GBP for the first time since December 2019. Over the past six weeks, since the world went into lockdown, investors had been gradually cutting back on their long positions in the Pound, possibly driving this bearishness.