- GBP/USD recovers from yesterday’s pullback.
- USD selling increases as risk sentiments improve.
- Senate to vote on increased unemployment benefits.
GBP/USD trades above the psychologically important 1.3500 during the early European trading after staging an intraday pullback of around 150 pips yesterday. The US dollar selling started afresh as the upbeat market sentiments were further assisted by the Congressional lawmakers’ preference for an enhanced unemployment benefit payout.
On Monday, the House of Representatives passed a motion to raise stimulus payments from 600 dollars to 2,000 dollars; the bill is now before the Senate. The development boosted risk-on sentiments and assisted the GBP/USD higher.
Brexit euphoria has now faded after it came to light that key services sectors haven’t been included in the UK and EU agreement. The subject of financial markets has not found a mention in the deal, which will weigh on the GBP as it is a big negative for the UK.
Another major worry for the pound is the recent discovery of a mutated variant of the coronavirus, which can spread much faster; this has forced authorities to re-impose lockdown plus travel restrictions.
The low-volume trading amid the holiday mood in the year-end also prevents aggressive positions by traders.
At the time of writing, one British Pound buys 1.3487 US dollars, up 0.31% as of 12:50 PM UTC.