GBP/USD set to slump on coronavirus flareups

GBP/USD set to slump on coronavirus flareups

Upbeat UK and US data were insufficient to send sterling higher. UK retail sales, coronavirus cases, and other developments are eyed next week with the pound poised to plummet, FXStreet’s analyst Yohay Elam reports.

Key quotes

“With low expectations for any progress in Brexit talks, the UK’s gradual reopening of the economy is of higher interest. Easing restrictions depends on coronavirus statistics, which are falling. Any flareups – such as in Leicester – could weigh on the pound.”

“The debate about the fiscal stimulus plan may continue. If doubts creep in, the government may bring forward additional measures and that could support sterling.”

 “June’s retail sales report stands out, with economists expecting another considerable bounce in monthly consumption. Markit’s preliminary Purchasing Managers’ Indexes for July are also likely to move the pound. These forward-looking gauges showed that manufacturing barely returned to growth while the services sector is still contracting. The same trends are set to continue in mid-summer, yet surprises are always possible.”

“Initial jobless claims are of higher interest amid the rise in coronavirus cases and also due to the timing – the figures are for the week including the July 12, when the Nonfarm Payrolls are held. If applications rise once again, markets may worry and the safe-haven dollar could suffer.”