More GBP/USD Weakness Ahead of Sunak Speech


GBP price, news and analysis:

  • GBP/USD will likely extend its recent slide caused principally by a stronger US Dollar.
  • For traders, the focus Thursday will be on a speech by UK Chancellor Rishi Sunak, in which he will announce plans to protect jobs amid rising Covid-19 infections.

GBP/USD weakness to persist

GBP/USD looks set for further losses as the US Dollar continues to strengthen amid Federal Reserve calls for more fiscal support for the US economy at a time when a stalemate in the US Congress makes such support increasingly unlikely. Fears of a second wave of coronavirus cases in Europe are also boosting USD, which has become the safe haven of choice for investors looking to reduce their exposure to assets such as Sterling that are seen as more risky.

GBP/USD Price Chart, One-Hour Timeframe (September 21-24, 2020)

Chart by IG (You can click on it for a larger image)

Sunak speech due

Domestically, Sterling traders will be concentrating on a speech by UK Chancellor of the Exchequer Rishi Sunak around lunchtime in London. He will announce new plans to support jobs, with reports suggesting the support will be aimed at workers who return to their jobs part-time.

The new program will replace the current Coronavirus Job Retention Scheme to combat unemployment due to the pandemic. That “furlough” scheme is due to end on October 31and an extension of it has been ruled out. Sunak has also dropped plans for a set-piece Budget later this year.

According to The Times newspaper, Sunak will announce an extension of the VAT sales tax cut for the hospitality and tourism industry through to the end of March. He will also extend the life of the coronavirus business loan schemes until November and increase the term of the loans from six to ten years, the newspaper said.

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Change in Longs Shorts OI
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— Written by Martin Essex, Analyst

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