GBP/USD: Deteriorated UK international relations and coronavirus cases cap recovery

GBP/USD has been struggling to gain ground amid Brexit concerns and souring relations with China. Today, coronavirus vaccine hopes and US cases are set to move the cable, Yohay Elam, an analyst at FXStreet, briefs.

Key quotes

“Britain is likely to cancel its extradition treaty with HK, its former colony as soon as Monday. PM Boris Johnson and fellow Brexit supporters envisaged the UK striking independent trade deals with the wider world following the exit from the EU. However, worsening relations with the world's second-largest economy do not bode well.”

“Brexit talks are set to resume after several rounds of deadlocked talks. Both sides acknowledged that Brussels offered London concessions, but the UK says these are insufficient while the bloc states they have not been reciprocated. Low expectations for any breakthrough during the summer imply a limited downside for sterling – unless one side abandons the negotiation table.” 

“The good news comes from the medical front. Synairgen, a British company, reported positive results for a cure for COVID-19. While a full examination of its treatment is still awaited, the announcement already triggered a triplication of its shares and UK authorities could fast-track its application.” 

“AstraZeneca, a large UK-based pharma firm, may announce results of another phase in its coronavirus vaccine candidate. The Lancet will likely publish an update later on Monday. Both developments are helping the pound and supporting the broader market mood.”

“Across the pond, America's COVID-19 cases are on the rise. Deaths have topped 140,000 and the number of infections surpassed 3.7 million. The situation is especially acute around Los Angeles, in Texas and in Florida.”