- Pound (GBP) under pressure as Britain hints at withdrawal from extradition treaty with Hong Kong
- A relatively quiet week data wise with net public borrowing on Tuesday and retail sales and flash PMI data on Friday
- Safe haven US Dollar (USD) advances as new daily coronavirus cases in America stay above 70,000
- US Congress to begin debating another round of stimulus as states in the sunbelt roll back reopening measures
The Pound US Dollar exchange rate (GBP/USD) is heading lower on Monday, extending losses from the previous week. The pair lost -0.4% across last week, settling on Friday at US$1.2567. At 06:15 UTC, GBP/USD trades -0.3% at US$1.2525.
Politics are weighing on Sterling as relations between the UK and China deteriorate and risk a wider confrontation. British Foreign Secretary Dominic Raab has hinted that the UK will withdraw from the extradition treaty with Hong Kong, a former colony which was handed back to China 23 years ago.
The move comes following the banning of Huawei from Britain’s 5G network and amid the possible sanctioning of China on its human rights abuses.
The Chinese ambassador to London accused the UK of bowing to American pressure as relations between the two deteriorate.
Looking ahead, this week is a relatively quiet week for economic data. Tuesday’s net public borrowing and the retail sales and flash PMI data on Friday could attract attention. In the meantime, the Pound is likely to be driven by sentiment, Brexit and political developments.
The US Dollar is pushing cautiously higher across the board as coronavirus numbers continues to spiral out of control and as the focus switches to additional US stimulus.
Congress is set to begin debating new stimulus package this week as several states in the South and South West of America implement fresh lockdown measures in an attempt to control the spread of coronavirus. Fears grow that US economic data, which has been relatively upbeat will start to deteriorate as the outbreak grows
The death toll has reached 140,000 and the number infected has surpassed 3.7 million. Texas, California, and Florida continue to break new records for the numbers of new daily cases.
There is no high impacting US data until the end of the week meaning that sentiment and covid-19 statistics will drive the greenback.
