- GBP/USD ticked higher adding to Thursday’s gains
- Renewed optimism of US fiscal stimulus boosted the mood in the market
- Covid concerns & rising US bond yields underpinned the USD and limited the upside
The GBP/USD rose to a three-day high, of 1.2805 in early European trade. GBP steadied after Chancellor Rishi Sunak unveiled the new Job Support Scheme, replacing the furlough scheme. The programme covers two-thirds of the lost wages and is part of a wider winter economic plan to help workers impacted by a resurgent COVID-19 pandemic.
A slight pick-up in risk sentiment weighed on US Dollar’s safe haven status and remained supportive of gains for the second straight day. Reportedly Democrats in the US House of Representatives are working on a $2.2 trillion fiscal stimulus package. Hopes of a rescue package boosted investors’ confidence and demand for equities.
GBP/USD rallied Wednesday’s two-month high, although lacked follow through. Fears are rising that a resurgence of covid-19 will lead to more severe lockdown measures. This combined with concerns of a global economic slowdown, offered some support to the US Dollar through safe haven flows, limiting upside for the GBP/USD amid rising Brexit fears.
Investors are looking cautious, preferring to sit on the side lines waiting for further Brexit news before taking large positions. The UK economic calendar is light so US price dynamics could remain the driving force. The US economic calendar sees the release of Durable Goods Orders. Other than that, risk sentiment will influence the USD