GBP/USD: The pound is suffering, US data to cause more harm

GBP/USD has been extending its falls amid fears of UK taxes and ongoing dollar strength. A critical Non-Farm Payrolls hint and BoE Bailey's speech are set to rock cable on Thursday, Yohay Elam, an analyst at FXstreet, informs.

Key quotes

“Sunak is trying to plug a hole in the government's coffers as it struggles amid the coronavirus crisis. Raising taxes maybe for a good cause – prolonging the successful furlough scheme which has been keeping workers attached to their jobs. The program is set to expire next month and the next steps remain unclear.” 

“Fears of mass unemployment joined the ongoing deadlock in Brexit talks. Chief EU Negotiator Michel Barnier stated that there has been no progress and accused his British counterparts of asking for the benefits of staying in the bloc without the obligations.” 

“BoE officials seemed to echo Sunak's concerns and issued warnings of a long recovery to pre-pandemic levels. Andrew Bailey, Governor of the BoE, reiterated his position that negative rates are in the BoE´s toolbox, but are unlikely to be implemented soon.” 

“The next moves depend on US data. The ISM Services Purchasing Managers' Index for August is set to fall from the high of 58 points recorded in July, while the employment component is projected to contract at a faster clip.” 

“Investors remain optimistic about a coronavirus vaccine, even though it may be rushed by President Donald Trump's administration ahead of the elections. Washington's sanctions against Chinese diplomats were shrugged off by investors. Any significant development on both fronts could move markets.”