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Pound Decline Continues With Forex Market Under Pressure

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GBP
  • Stronger Dollar Hits Sterling
  • Reopening Concerns Persist Over Virus Variants 
  • Powerful Stock Market Run Continues

The GBP continued to remain under pressure this week on the back of a US Dollar that is returning to strength. The pair dropped back below 1.415 as the USD showed control with little positive news to drive the Pound. This comes as worry persists both in the UK and around the EU about rising numbers of COVID cases, particularly the Delta variant. This concern has as yet failed to put a dent in Wall Street though. Despite a slow opening today, markets have been positive for much of the last 7 days.

Dollar Back on Top as Sterling Flounders

With the UK leading the charge in terms of sticking to their reopening plan, the Pound had led the way in strength until quite recently. While the plan to get back to work in Britain has not been impacted, domestic concerns and worry over COVID cases have now been reflected in the forex trading of Sterling. The currency is at a low point that has not been helped by the awakening Dollar.

Besides virus worries, Britain, and leader Boris Johnson are still dealing with the aftermath of Brexit in the background. The key issue remains around a customs border between the UK and Northern Ireland. Much to the anger of EU leaders, the UK is seemingly content to continue ignoring this part of the agreement which they made. This leaves a rising lack of certainty on future relations with the bloc.

Euro Kept Flat Despite GDP Upgrade

On a relatively quiet day for major figures in the Eurozone, they too have felt the strength of the returning US Dollar, albeit not with as much difficulty as their neighbors in the UK. This is illustrated by the fact that despite an upgrade in the final Q1 GDP figures for the region, the Euro remains pressed below 1.22 against the Dollar.

On the upside, there was the GDP upgrade but on the other end, German ZEW economic sentiment numbers missed their target today. This follows a disappointing miss on factory orders in April from the largest economy in the EU. This data showed a 0.2% contraction where analysts had expected a 1% gain.

Wall Street Continues Strong Form

While forex brokers grappled with demand for the Dollar, Wall Street is showcasing a continued winning streak. Markets have generally been strong across the board day after day despite a relatively flat opening today. This has seen a strong rebound in many tech, and reopening names.

US treasury yields remain a strong contributing factor here. These have remained low despite the ongoing concern over inflationary pressure. The retail trading boom has come roaring back again too. This has seen huge gains in many popular names like AMC and Clover Health as the SEC says they are continuing to monitor the action and will take steps to protect retail traders.

 

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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