The US dollar started the trading week on the back foot in Asia, as traders struggled with the current economic outlook. There is currently a fine balancing act being played out in the United States, whereby the government are pressing ahead to reopen the economy but are seeing COVID-19 cases rise in vast numbers. Just one day last week saw an 11% daily rise of infections in Texas alone, moving the total overall increase in the States above 15% over the last 2 weeks. This second wave fear is spreading globally, with areas of Beijing and Australia reportedly looking to reintroduce some restrictions to stop a second wave in its tracks.
With USD opening softer in the day, it gave GBP the opportunity to regain some losses from last week and to move above 1.24 at the time of writing. Last week saw four consecutive days of losses for GBP/USD, where the pair was pushed to a near three weeks low.
The UK is looking to move to the next steps of reopening the economy. It is expected for pubs and restaurants being allowed to reopen at the beginning of July which should provide support to the economy. With the delay in comparison to the US and Europe, analysts fear GBP could be left behind.
The economic calendar is very light with data today. However, tomorrow we will see manufacturing and services data released in Europe and the UK. Investors will be keeping a close eye on the reading, searching for direction on the recovery of both economies.
Have a great day,
Author: Jack Nicholls, Relationship Manager
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