- Pound (GBP) slips after strong vaccine inspired gains on Monday
- Brexit talks and rising tensions with China weigh on the Pound
- US Dollar (USD) broadly under pressure amid upbeat mood in the market after EU leaders agree to a massive stimulus deal
- California new daily covid cases surge to 12,000
The Pound US Dollar (GBP/USD) exchange rate is edging lower on Tuesday, paring gains from the previous session. On Monday the pair settled +0.7% at US$1.2662. At 06:15 UTC, GBP/USD trades -0.1% at US$1.2652.
The Pound is paring vaccine inspired gains from the previous session. Encouraging early Phase 3 trial results from Oxford University and AstraZeneca’s vaccine candidate boosted the mood in the market at the start of the week, lifting the riskier Pound whilst dragging the safe haven US Dollar lower. The results showed that 100% of those given the jab produced an immune response which lasted at least 2 months and crucially there were no serious side-affects.
Today Brexit talks resume again after the last round’s disappointment, hopes ad expectations are low for an agreement. The British government’s plan for an outline deal by the end of July looks completely out of the question.
US Secretary of State Mike Pompeo is also in the UK to discuss China, 5G and a Brexit free trade deal with Prime Minister Boris Johnson. His arrival comes after Britain announced that it would suspend its extradition treaty with Hong Kong following China’s introduction of a national security law by China. The move by Britain has stoked an already deteriorating relations with China.
The US Dollar is trading broadly flat versus its major peers on Tuesday amid a broad upbeat mood in the market. Vaccine optimism in addition to a huge stimulus plan being agreed between European Union leaders has lifted risk appetite.
US Senators are also discussing another tranche of stimulus. The Republicans are proposing a $1 trillion rescue package whilst the Democrats are putting forward a $3trillion deal.
Stimulus talks is distracting investors from the rising coronavirus cases. California reported an increase of almost 12,000 new cases on Monday, the most since the coronavirus pandemic began. Total cases in California have reached 400,000. To combat the spread California is being shut down again.
Economic data from the US had been encouraging in recent weeks. However, with areas going back into lock down investors fear a double dip recession.
