GBP/USD: Brexit off headlines amid rumours of Johnson stepping down, pound moves up

GBP/USD has been edging up as Brexit fears fade. Meanwhile, Downing Street rejects rumors that PM Johnson will be stepping down in six months. The main driver is Fed speculation, yet politics and the virus remain of high interest as well, FXStreet’s analyst Yohay Elam informs.

Key quotes

“Speculation is whirling about the political future of PM Boris Johnson. According to a column in The Times, the father in law of Johnson's special adviser Dominic Cumming said that the PM is struggling with the effects of coronavirus and may step down within six months.” 

“Johnson's rumored retirement would come after Brexit is completed – the transition period expires at year-end. The rumors have helped push concerns about a no-trade-deal exit off the headlines and allowed cable to edge higher.”

“Jerome Powell, Chairman of the Fed, is set to address the virtual Jackson Hole Symposium and may layout a paradigm shift in policy. Instead of aiming for 2% every year, the Fed would move to Average Inflation Targeting (AIT) which would allow for the price to surpass the 2% level and catch up with past low inflation. Such a change implies leaving low-interest rates for longer – implying a weaker dollar. Yet as the wait continues, investors are somewhat nervous and the dollar is paring its losses.” 

“US Durable Goods Orders are set to show an ongoing recovery in July, in line with other upbeat figures such as New Home Sales published on Tuesday – topping 900,000 annualized, the highest since 2006. On the other hand, the Conference Board's Consumer Confidence fell to 84.8 in August, the worst in around six years.” 

“Markets are stable as COVID-19 cases remain in their current trends – slowly rising in the UK and gradually decreasing in the US. Hopes for a vaccine – including from two British projects – remains prevalent. The University of Cambridge will receive government support for its immunization project, in addition to the University of Oxford.”