The GBP / USD pair strengthened for almost up to half of the European session and reached the peak for two weeks. That was around the area of 1.3865 – 70. The cause is the investors who saw the United States NFP blockbuster report last Friday.
That was the common risk-on nuance which always limit the upper part for the USD safe – haven and give a little increase on the GBP / USD pair. The British pound is supported by the vaccination distribution program which is so successful.
Furthermore, the economic situation in that country is also opened again gradually. The next increase can be related with some sales expositions ahead of an announcement that will be made by Boris Johnson as the British Prime Minister right now. What is it about?
The Further Decision that May be Taken
The announcement made by Boris Johnson is in the second phase of the border easing. The possibility is that several unimportant stores, restaurant, pub, hairdressers, nail salons, etc can be opened again from 12 of April this year. The travel abroad will be allowed again.
However, some factor combinations may continue to support greenback and limit the further increase for that GBP / USD pair in the market. The investors are still optimistic about the prospect of US economy recovery which is faster than the coronavirus pandemic. One thing is highly supporting that.
That is the stimulus plan created by Biden where the amount is more than $2 trillion. Meanwhile, the optimistic US economy has been triggering the concern about the inflation increase in that country. People also doubting the Fed about their interest rate policy.
Many investors are not sure that the organization will maintain the really low interest rate for a longer period. This thing at the end will push the obligation result of the American government, especially for the 10-year tenor to be back upper 1.70 percent.
The Liquidity Condition in Europe
For your information, before the European market was closed due to the Easter celebration on Monday. The thin liquidity condition may hold the investors to place their aggressive bet. In the future, it will make them are wiser to wait for the further strong purchase action.
It is especially before the traders positioning themselves for the intrastate movement extension. The market participants are now waiting for the US economy data. They also highlight the ISM service data release about the new supporters. There is one more thing to note.
The obligation result will have an impact on the dollar price. Next, the market participants may take the clues from the market risk sentiment which is wider. It is important to take some short-term chances around the GBP / USD pair. Besides that, the EUR / USD has the same trend.
That pair is sold in a better purchase offer in the beginning of a European session. That remains the bounce near 1.1759 because of the market nuance which is so optimistic and weight on dollar. In fact, that was the common effect of safe-haven for certain currencies.
The Market Sentiment Is Supported by the Non-Farming Payrolls
The US non-farming payrolls still become a factor that supports the market sentiment. It shows that the American Economic is recovered faster. That optimism could push the Fed to increase the interest rate sooner than it is recommended.
The interest rate increase expectation and Presidential infrastructure plan continues to make the US treasury result is higher than before. Furthermore, the short-term interest rate in the market is increasing sharply. However, that may limit the EUR / USD bounce.
The concern about COVID-19 which continues to happen in Europe and the slow vaccination program created by the France government can be the factors that decrease the PDB 2021 growth prediction. It may weight on some currencies.
