Quarantine in Northern England may limit the growth of the pound

31.07.2020 14:19
The pound rose above 1.31 on the back of a massive dollar sell-off, but a new quarantine in parts of Northern England may trigger a correction.
"North in Lockdown 2" - the headline of one of the British tabloids sums up the events that are about 4.3 million Britons living in Manchester and other parts of Northern England. A sharp increase in the number of cases in these regions caused the announcement of the closure for quarantine.
Although the UK seems to be imposing restrictions before cases of coronavirus are uncovered, some US States are not as strict, or at least the results are far from satisfactory. The load has stabilized at a high rate of about 70,000 per day, while the daily death rate continues to increase, exceeding an average of 1,200 people. The dollar is suffering for a variety of reasons. Safe haven flows continue to unwind during speculation about further fed stimulus - as yield curve control (YCC) lowers bond yields, driving the dollar down with them.
While the UK government is interested in providing aid and incentives, us lawmakers continue to discuss the next steps, while the unemployed lose their special Federal benefits. Optimism about progress in negotiations between Republicans and Democrats may help the dollar, but investors will believe it when they see it.
However, the growth of the pound may stop - at least on the last day of the month. Money managers may rush to adjust their portfolios, and this may contribute to the correction of the currency pair.

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