The British pound is lower against the US dollar on Monday afternoon after a spokesman for UK Prime Minister Boris Johnson renewed Brexit fears when he said the UK is “not seeking anything special from the EU in trade talks”. Meanwhile the US dollar was trading with a softer tone thanks in part to a jump in the yuan in reaction to new stimulus measures in China.
GBP/USD was lower by 42 pips (-0.33%) at 1.3004 with a daily price range of 1.30 to 1.305 as of 2.30pm GMT. GBP/USD turned lower after a re-test of Friday’s high at 1.305 but held the big 1.30 psychological level. Today’s declines detract slightly from the +1.19% gains made last week.
The British pound
The spokesman for Boris Johnson went on to say, “We want something similar to other deals they have struck.” Recent statements from the UK government have sounded fearless about the UK economy diverging from the European Union. In a complete departure from previous statements that suggested a desire for no trade barriers, the Johnson government is now ready to accept some so-called “trade friction” in order to achieve sovereignty for the UK.
The pullback in Sterling follows last week’s surprise announcement Rishi Sunak will take over as Chancellor of the Exchequer at the behest of PM Boris Johnson and his advisors. The news is still being processed by investors, some of whom are concerned that No.10 Downing Street is making a power grab to control the Treasury.
US dollar
The dollar was higher against Sterling but against other currencies it was losing some steam on Monday. Although fears about the coronavirus COVID-19 are starting to pick up again because of the rising number of cases, that is being combatted by increasingly assertive steps by Chinese authorities to thwart the economic damage.
With lower economic risk, there is less need for a haven like the dollar. On Monday, the government in Beijing announced new fiscal stimulus including tax cuts and subsides while the People’s Bank of China cut interest rates again.
