GBP/USD Climbs Higher Despite Northern Ireland’s Post-Brexit Trade Woes
Aiswarya Gopan • 2 min read
GBP/USD is on the rise, making the most of the weakness in the US dollar as traders disregard potential challenges arising from post-Brexit trade concerns surrounding Northern Ireland. At the time of writing, GBP/USD is trading at around $1.418.
The Sterling is also enjoying its moment under the spotlight as its leading peers US dollar and Euro trade somewhat cautiously in anticipation of upcoming economic events scheduled for later in the week. While USD traders await the release of US CPI figures to gain a better understanding of inflation conditions in the nation, moves in the EUR are muted ahead of the ECB policy decision scheduled for Thursday. The implied volatility in the Cable has also dropped to the lowest levels seen since February 2020 amid this cautious tone in forex markets.
However, gains in GBP/USD remain limited over concerns about the UK government planning to extend its full reopening in the wake of a resurgence in fresh coronavirus infections from the Delta variant. UK PM Boris Johnson and his Cabinet are keeping a close watch on the data related to COVID-19 tolls over the past four weeks to decide whether to reopen the economy completely by June 21. A delay in doing so could pressure the Sterling and keep this pair under pressure in the coming days.
The Sterling is also likely to face headwinds owing to trouble brewing on post-Brexit trade arrangements in Northern Ireland. Later today, Britain’s Brexit minister David Frost is set to meet with the Vice President of the European Commission, Maros Sefcovic, in an attempt to iron out the issues but the deadlock has persisted for several months and a breakthrough at this point seems unlikely.