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GBP/USD Forex Market Among Those to Benefit From Positive Sentiment

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  • Pound Surges to Two-Week Highs on Reopening Hopes
  • Several UK Political Concerns Brushed Aside
  • US Markets also Jump as Optimism Prevails

The first day of trading after the Memorial Day break on Monday looks set to rejuvenate forex markets and the wider economy with a positive push. This comes amid widespread hopes of a coronavirus breakthrough, and increasing positivity that the US and global economies will be back open for business very soon. The tone has been well set by the GBP which has brushed aside political concern and controversy to reach a high point.

GBP Reawakens With Strong Positive Momentum

There had been a lot of concern surrounding the Pound and the British economy in general going into this week. The nation appeared confused by a host of unclear distancing guidelines, and has in recent days been swarmed by domestic political problems. These problems stem from a 260 mile March trip made by chief advisor to the PM, Dominic Cummings. It is alleged that he broke lockdown regulations to stay with his family as both he and his wife developed COVID-19 symptoms.

This news has caused outrage among the British public and ignited political rivalries, though it seems to have had no adverse impact on the forex market. The Pound has been buoyed by positive market sentiment which has worked to weaken the US Dollar as forex traders begin to venture outside the safe haven. At the time of writing, the pair was hitting a two-week high point about $1.23 and still moving in a positive direction.

Sterling Push is Ignoring Several Political Factors

Traders are not only ignoring the misstep of the Prime Ministers team in their surge to back Pound. They have also managed to look beyond the impending Brexit deadline of June 2nd when the transition period could be extended. Despite the apparent lack of any agreement, and the ongoing strain of the Pandemic, UK leader Johnson has repeatedly ruled out any extensions to the period.

The fact that the Bank of England remains open to imposing a negative rate to help stimulate the economy moving forward, is something else that traders seem to be ignoring. Negative rates could see people paying to save money. Implausible though it may seem, the BoE has refused to rule this out as an option. It is possible however that both of these factors have already been priced into GBP/USD trading.

US Stocks Surge With Huge Rally

The positive feeling in European markets carried over to the opening bell on Wall Street as the Dow Jones jumped 600 points and the S&P 500 index surged more than 2% to above 3000 for the first time since early March.

These positive movements were most strongly felt in companies directly impacted by the virus outbreak as hopes continue to grow that the economy will be back in full swing soon. More positive news on virus trials has further been a further boost for traders.

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.

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