GBP/USD has slipped below 1.40 on the back of a rise in COVID-19 cases in the UK. The Delta version is up to mischief, but the recovery is still solid. Furthermore, tensions between the UK and the EU over Northern Ireland should weigh on GBP until next week’s BoE meeting, Westpac economists report.
Britain’s efforts to renegotiate the Northern Ireland Protocol to avoid potential civil unrest (the federalist marching season concludes on 12 July) fueled the EU’s frustration at the UK’s failure to implement the existing agreement The union insisted that Britain’s unilateral “grace period” trade goods ends on June 30. The standoff reflects the potential fragility of the agreement reached with the EU, and possibly the UK.
“This week’s UK-EU trade deal is the first fully independent (from the EU) trade deal the UK has done since Brexit. The UK wants to build on this and also desegregate its financial system after Brexit. Both aspects Tensions may rise in the EU rather than pacify them. Survey data up to next week’s BoE MPC should show potential for further improvement, but a delay in the easing of all Covid restrictions could dampen the near-term outlook is. ”
“Short term tensions could push GBP/USD towards 1.38 support but this is still seen as a potential starting point for a potential upward range flip.”
Organizer. Zombie aficionado. Wannabe reader. Passionate writer. Twitter lover. Music scholar. Web expert.