- GBP/USD touches 1.3368, a multi-week high.
- UK Tories resist Treasury move to hike taxes in the November budget.
- No-deal Brexit fears refreshed as UK warns EU over state aid rules.
- Bank holiday in Britain today; market eyes Fed’s Clarida, Dallas Fed data.
GBP/USD is trading around 1.3350 ahead of the London open on Monday after briefly touching December 2019 highs earlier. The US dollar weakness has contributed to the pound’s rally against the dollar to 1.3368, but a sustained momentum might be sullied by the UK bank holiday today along with the Brexit fears and tax concerns.
The cable largely ignored the report on the UK Times regarding the British PM Boris Johnson’s no-deal Brexit threat to the European Union as the dollar weakness helped the pair. The dollar index is near multi-month lows after heavy losses posted on Friday.
The GBP/USD also showed a muted reaction to the weekend news regarding the UK Treasury’s push for tax hikes despite Tories’ objection.
The BOE Governor Andrew Bailey’s last week comment helped the pound along with the dollar weakness to move higher.
The US-China tensions are playing in the background setting the market mood. At the same time, the coronavirus worries seem to have abated a bit with US health authorities suggesting an early cure, even when the rush for the vaccine attracted criticism from various quarters. China’s upbeat PMI data helped the bullish mood; Japanese numbers were mixed.
S&P 500 Futures posted a record high above 3,500 along with the Asia-Pacific stocks in the green led by Japan’s Nikkei 225.
Federal Reserve Governor Richard Clarida speech and then Dallas Fed Manufacturing Business Index will be awaited providing triggers for intraday moves. The general market reaction to the oversold dollar will be a significant theme to watch.