Sterling Boosted UK Government Re-Opening Plan

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GBP/USD Price Analysis & News

  • UK Government Plans to Go Ahead with Final Stage of Re-Opening
  • GBP Bullish Case Picking Up vs EUR and CHF

UK Government Plans to Go Ahead with Final Stage of Re-Opening

Despite the relatively quiet start to the week, the Pound has been among the best performers this week, with the currency given an added boost from UK PM Johnson’s announcement that the government will proceed with the final stage of unwinding lockdown measures on July 19th (full details).

While the lifting of final restrictive measures is expected to be met with a pick up in Covid cases as a result of the spread of the Delta variant, the government remains confident that hospitalisations will remain low amid the rollout of vaccinations. In turn, the plan to go ahead with the full-reopening reinforces the bullish case for the Pound, particularly against the Euro and Swiss Franc.

GBP Bullish Case Picking Up vs EUR and CHF

Topside levels in EUR/GBP at 0.8600 and 0.86-30-40 are the key areas to look for pullbacks with downside risks remaining for the move to the YTD low at 0.8470. At the same time, dip buying is likely to be the key theme for GBP/CHF with good support at 1.2700 and 1.2600 looking for a move back towards the 1.3000 handle. The move by the government will bolster expectations of BoE tightening, however, while the BoE’s current stance remains somewhat dovish relative to market pricing, they will at some point this quarter provide a hawkish pivot as the economy continues to grow robustly and thus makes the August MPR a key meeting.

EUR/GBP Sliding Towards YTD Low

Source: Refinitiv

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