The British pound is higher against the US dollar on Tuesday.
Two top US banks reported some dire first quarter earnings but the greater certainty that came with seeing the results helped propel riskier currencies like the pound higher, while havens like the dollar fell.
Adding to the better feeling in markets was the partial reopening of some European economies.
Pound versus US dollar was up by 119 pips (+0.94%) to 1.2624 as of 5pm GMT.
GBP/USD continued to build on its success at breaking 1.25 on Monday and rallied another 100 pips to take out 1.26 with ease on Tuesday. Yesterday the exchange rate rose +0.46%, giving a week-to-date return of +1.35%.
British pound gains as Europe reopens for business
With UK Prime Minister out of hospital and recuperating in Buckinghamshire, the pound is continuing its run of good form, helped by the reduction in political uncertainty. It is not yet known when he will return to work running the government but consensus is that it will be in time to make some of the big calls on how to exit the current lockdown. The lack of leadership to coordinate an ‘exit plan’ in the UK could be a future source of uncertainty the longer it persists.
In Europe, more countries continue to reopen their economies as virus numbers come down. France was an outlier after President Macron extended its lockdown but Spain and Italy have opened up sections of the economy, allowing part of the workforce to return to work.
Dollar falls as US banks report big losses
US banks were leading a kick-off in what is expected to be an all round bad earnings season. Nonetheless some more clarity about how bad it has been gives market participants a chance to look past the current problems and judge the timing of a future recovery.
JP Morgan Chase and Wells Fargo released results on Tuesday and both saw a big jump in bad loan growth, which is unsurprising given that individuals and businesses are unable to make payments without an income.
