- Pound (GBP) lifts as primary schools return and reopening continues
- US Dollar (USD) lower in risk on trading as Trump adopts softer tone on China
- Chinese manufacturing sector expands
- At 07:15 UTC, GBP/USD is trading +0.3% at US$1.2386
The Pound is extending gains for a third straight day on Monday. The Pound US Dollar exchange rate settled on Friday +0.2% at US$1.2346. However, the pair lost 2% across the month of May, a traditionally weak month for the Pound.
At 07:15 UTC, GBP/USD is trading +0.3% at US$1.2386, having slipped from its three-week high of US$1,2414 reached overnight. The pair is being lifted by a broadly softer US Dollar and growing optimism over the reopening of the UK economy.
Falling coronavirus infections and deaths have led British Prime Minister Boris Johnson to ease lock down measures. Primary schools will open their doors today for children to return in reduced sized class, some outside trading will also be allowed, as will the meeting of 6 people outside, respecting social distancing measures.
Brexit could weigh on sterling gains as Brexit talks take place again this week, the final round of talks before the key June deadline. Both sides have until the end of the month to request an extension to the transition period. Both sides are accusing the other of wasting time. However, the transition period deadline will almost certainly not be extended.
UK manufacturing data will be eyed. Analysts are expecting the print to remain close to the preliminary reading of 40.6, at 40.7. The figure 50 separates expansion from contraction.
The Dollar is declining on rising risk sentiment at the start of the week despite the US riots which have grabbed headlines over the weekend. The improved mood in the market comes thanks to President Trump’s softer approach to China at the end of last week.
In his speech, Trump removed Hong Kong’s special trade status, as expected. However, he didn’t withdraw from the trade deal or impose any sanctions or Chinese officials, provoking a sigh of relief when markets opened in Asia on Monday.
Chinese manufacturing PMI also offered a source of optimism for investors, jumping back into expansionary territory, whilst non-manufacturing exceeded expectations showing domestic demand was picking up.
Today investors will look towards US manufacturing PMI data. Analysts are expecting the reading to remain below 40.
