GBP/USD: Several dark clouds hang over sterling

GBP/USD has been remarkably holding its gains and shrugging off headwinds but US and UK relations with China, Brexit and coronavirus figures among other themes all point lower, FXStreet’s analyst Yohay Elam briefs.

Key quotes

“Chinese broadcasters discontinue showing Premier League matches across the world's second-largest economy. That is the latest move in deteriorating Sino-British relations, which are mostly around Hong Kong. Britain canceled its extradition treaty with the city-state – and former colony – after China tightened its grip there. The UK also announced it will be phasing out Huawei's 5G equipment.” 

“Beijing is clashing with Washington – or more precisely in Houston. The US announced the closure of the Chinese consulate in the Texan city, hiring that workers there were engaged in spying. President Trump suggested that Chinese diplomats were burning documents in the courtyard. While markets have – so far – shrugged off the worsening of relations between the two superpowers, China's retaliation may weigh on sentiment, at least temporarily.”

“Investors are shrugging off rising US coronavirus cases and deaths, with the latter surpassing 1,100 once again. New figures coming out of Florida, California, Texas, and other states may weigh on sentiment.” 

“The US and the UK have been discussing future trade relations but failed to move forward. Estimates now stand at achieving an accord only in 2021 – after the Brexit transition period. That dampens hopes for a positive shift to enhanced trading with partners outside the EU.”