GBP/USD Soars to Three-Month High, Risk-on Sentiment Supports

GBP/USD Soars to Three-Month High, Risk-on Sentiment Supports

Posted Wednesday, June 10, 2020 by
Arslan Butt • 1 min read

GBP/USD has benefited from the broad based weakness in the US dollar lately, trading close to a three-month high as the market sentiment improves on account of reopening of economies after lockdown. At the time of writing, GBP/USD is trading around 1.276.

So far this month, the Cable has gained over 3% and risen above the key 1.27 level for the first time since March, when the coronavirus pandemic spread across the world and dented the market’s risk appetite the world over. However, the sentiment has been improving in recent weeks as several countries, including Britain, have begun easing lockdown restrictions and resuming economic activity.

The British government has confirmed that non-essential retail outlets can start functioning from June 15, while international arrivals can also start entering the country from next Monday. Passengers arriving from international destinations will have to undergo 14-day quarantine upon their return.

In addition, Britain is also looking to resume international air travel with the start of “air bridges” – unrestricted movement between Britain and some select countries from June 29. This could be the first step towards restarting the tourism and airline sectors, which have been severely impacted by the pandemic and the ensuing shutdown.

On the Brexit front, however, there have been no new developments to support bullish movement in GBP/USD so far. The latest round of talks between Britain and the EU have come to an end with signs of very little progress so far, even as Britain started negotiations with Japan towards finalizing a post-Brexit trade agreement.

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