GBP / USD hit the highest levels since December amid a weak dollar. Concerns over Brexit and the increase in coronavirus cases in the UK and the speech by BoE Governor Bailey are seen on Friday, reports Yohay Elam, analyst at FXStreet.
Federal Reserve Chairman Jerome Powell announced a major policy change – allowing inflation to overheat to allow employment to rise – signaling lower rates for longer. Investors had anticipated the move and the initial reaction was choppy – but once the dust settles, the prospect of low long-term borrowing costs weighs on the dollar.
Britain is likely moving closer to a Brexit no-trade deal. According to the Times, EU officials have issued a two-week ultimatum in order to achieve a breakthrough in trade and security negotiations. David Frost, the UK’s chief negotiator, reportedly rejected Brussels’ approach and said he would not accept “dictates”. “
Andrew Bailey, Governor of the Bank of England, will speak at the Jackson Hole Virtual Symposium – the same venue Powell spoke. Bailey can respond to his American colleague by expressing his openness to a similar policy.
‘Another reason for concern is the increase in coronavirus cases in the UK, as the school year begins. Authorities are scrambling to reopen schools safely, and the task has become more difficult with an increase in infections. This compares to a gradual decrease in the US COVID-19 curve. “