GBP/USD Recovers as Investors Brush off Reports of Record Rise in Global Coronavirus CasesThe dollar has started the new week on a weak note which has led to a rally in GP/USD back above the 1.2400 handle.
Investors are not putting a lot of weight to a report from the World Health Organization that showed a record increases in new Coronavirus cases and are bidding up risky assets.
The report from the WHO showed a rise of 183 thousand new cases on Sunday, the largest on record. New cases appear to be concentrated to select countries with Brazil showing the largest number of new cases followed by the US.
Despite the concerning report, the UK will push forward with its plans to ease lockdown restrictions. British Prime Minister Boris Johnson is expected to announce an easing of social distancing rules that will take effect next Tuesday.
Last week, the Bank of England surprised markets with a more positive outlook than expected. The BoE left rates unchanged at 0.1% and increased their asset purchase program by 100 billion pounds while analysts were calling for a much larger increase.
The economic calendar is light in the session ahead which could lead to range trading. Data from surveyed purchase managers on Tuesday, from both the UK and US, is more likely to move the markets.
The markets are in clear risk-on mode in early trading on Monday. Risky currencies like the Australian and New Zealand dollar are catching a strong bid. The S&P 500 is set to open about 1% higher.
The US dollar is the weakest currency on the day while precious metals are seen giving back early day gains. If this trend continues into the North American session, GBP/USD stands to extend its early day gain.
On a 4-hour chart, the pair is set to post a bullish engulfing candle that could set a positive tone for the rest of the day.
The major hurdle to the upside falls at 1.2500. This level has been well-respected and acted as strong support earlier in the month. Further, the upper bound of a declining trend channel falls near it to create a confluence.
- GBP/USD is recovering after a steep fall last week as the dollar has fallen under pressure on a steady bid in risk assets.
- PMI data from the UK and US will be closely watched tomorrow to gauge how the economic recovery is progressing.
For a look at all of today’s economic events, check out our economic calendar.