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Pound Falls Amid U.K. Reopening Doubts

Pound Falls Amid U.K. Reopening Doubts

The pound was lower against its most major counterparts in the European session on Monday, as the rapid spread of new COVID-19 variant in Britain sparked concerns about a reopening on June 21.

The so-called Delta variant, which was first identified in India, was found to be about 40 percent more transmissible than the U.K. strain of virus.

U.K. Health minister Matt Hancock said on Sunday that it was too early to say whether the government could stick to its reopening timeline, which has set the date of June 21 to end the lockdown.

Caution prevailed following comments from U.S. Treasury Secretary Janet Yellen that the President’s $4 trillion spending plan is positive for the economy, even if it leads to a higher inflation and an eventual rate hike by the U.S Federal Reserve.

Focus now shifts to May’s U.S. consumer price data due on Thursday for policy clues.

Data from Lloyds Bank subsidiary Halifax and IHS Markit showed that U.K. house prices increased at the fastest pace in nearly seven years in May driven by the easing of national lockdown restrictions and the gradual reopening of the housing market.

House prices grew 9.5 percent year-on-year in May, following April’s 8.2 percent rise. But this was slower than the 10 percent increase expected by economists.

The pound dropped to a 5-day low of 1.2703 against the franc and a 4-day low of 0.8613 against the euro and was steady thereafter. The pound had ended Friday’s deals at 1.2726 against the franc and 0.8584 against the euro.

The pound fell to 154.55 against the yen, its lowest level since May 27. Should the pound falls further, 150 is likely seen as its next possible support level.

In contrast, the pound recovered to 1.4175 against the greenback, off an early low of 1.4111. On the upside, 1.45 is possibly seen as its next resistance level.

Looking ahead, the U.S. consumer credit for April will be out in the New York session.

The material has been provided by InstaForex Company – www.instaforex.com