Pound Rises To Multi-week High Against U.S. Dollar Amid Sunak's Mini Budget
08 Juli 2020 - 01:28PM
RTTF2
The pound climbed to a multi-week high against the U.S. dollar
in the New York session on Wednesday, after U.K. Chancellor Rishi
Sunak unveiled £30 billion budget in parliament to protect the
economy from a steep downturn in the wake of coronavirus
crisis.
In his summer statement, Sunak announced a stamp duty cut in
England and Wales for this financial year. The homebuyers will be
exempted to pay stamp duty, if purchases are less than £500,000
until March 31.
The government will slash VAT in hospitality and leisure
businesses to 5 percent from 20 percent until next January, he
told.
Sunak announced a new job retention policy, with employers being
paid £1,000 per employee taken back from furlough and kept until
January.
The currency dropped in the European session after German
Chancellor Angela Merkel warned that the European Union should
prepare for a possibility of a no-deal Brexit and rising Covid-19
cases in some parts of the world dampened risk sentiment.
The progress in Brexit negotiations has been slim despite
accelerated efforts from both sides, Merkel said in a speech to
European Parliament lawmakers in Brussels.
"I will continue to push for a good solution but we should also
prepare for a possibility of a no-deal scenario," Merkel added.
Sentiment dampened after the U.S. coronavirus outbreak crossed a
grim milestone of over 3 million confirmed cases and the World
Health Organization acknowledged "evidence emerging" that the
coronavirus can be transmitted through the air.
The pound approached 1.2601 against the greenback, setting a new
3-week high. On the upside, 1.28 is possibly seen as the next
resistance level for the pound.
The pound rose to a new 3-week high of 135.43 against the yen,
from a low of 134.58 hit at 5:30 am ET. The pound is seen finding
resistance around the 137.00 level.
The pound recovered to 1.1825 against the franc, after falling
to 1.1782 at 5:15 am ET. The next possible resistance for the pound
is seen around the 1.22 level.
In contrast, the pound dropped against the euro and was trading
at 0.8997. The pound is likely to challenge support around the 0.91
level.
Looking ahead, U.S. consumer credit for May is due in the New
York session.
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