Currency strategists still caution FX traders that Sterling shorts are now at a 5-month high.
The Pound edged higher against its US rival and struck a 3-week peak during early trade in London after Britain eased back on some of its quarantine restrictions. New rules, solely for Britain, came into effect today, despite warnings that the decision was fraught with risk given that there is yet no way for the government to track any new outbreaks of Covid-19. Currency strategists still caution FX traders that Sterling shorts are now at a 5-month high. Analysts largely attribute that to the higher numbers of Coronavirus related deaths, the dire economic outlook, the failure for the Brexit talks to progress as well as the Bank of England’s consideration of negative rates.
In London trade, as of 11:05 am, the GBP/USD was trading at $1.2393, up 0.3457% and sliding away from the session peak of $1.24266. The EUR/GBP was lower at 0.8970 Pence, down 0.2547%; the pair has ranged from a trough of 0.89624 Pence to a high of .90329 Pence.
PMI reports for the month of May were released today were largely in line with expectations. In China, the Caixin PMI for the manufacturing sector improved to 50.7 against an expected 49.6. In Europe and the UK, it was a mixed bag of results. While Germany’s PMI missed analysts’ forecasts at 36.6, Spain, France and Italy also had better than expected results at 38.3, 40.6 and 45.4, respectively. In the UK, analysts called it exactly right with a reading of 40.7. Later today, US PMI reports will be released; analysts predict that the ISM Manufacturing Report will come in at 40.7, a slight improvement from last month’s reading. Any significant miss on the US report could further weaken the already struggling US Dollar.