GBP/USD Exchange Rate Sinks Despite Downward Pressure on US Dollar
The Pound to US Dollar (GPB/USD) exchange rate fell by -0.5% today, with the pairing currently trading around $1.266.
The US Dollar (USD) suffered today as anxiety over a surge of Covid-19 cases in the US has dragged down the value of the ‘Greenback’. As a result, investors are feeling increasingly concerned for the world’s largest economy’s recovery from the coronavirus pandemic.
US President Donald Trump shocked markets last night by warning that the Covid-19 pandemic would get worse before it gets better, while urging Americans to wear masks.
Jeffrey Halley, an analyst at OANDA, also commented:
‘The overnight session was notable for the renewed energy seen in the great US Dollar rotation trade. The Dollar fell almost everywhere as the tailwinds from the EU pandemic package, and the inspiring news on the Covid-19 vaccine front turned into hurricane-force winds.’
In US economic news, USD investors will be awaiting today’s release of the latest Housing Price Index and Existing Home Sales figures. Any signs of the American economy remaining in the doldrums over the past few months would prove USD-negative.
Pound (GBP) Sinks as UK Government Sources Dampen Post-Brexit Trade Hopes
The Pound (GBP) suffered today on rising fears over UK-EU trade relations following reports that the British Government could abandon hopes of a post-Brexit trade deal.
Senior sources told The Telegraph that the Government is working on the assumption of World Trade Organisation terms ahead of the 31 December deadline.
The source said:
‘No trade deal has to be the working assumption, because that’s what we have to prepare for. But it doesn’t mean it’s what we want or are working to make happen.’
Thu Lan Nguyen, an analyst at Commerzbank, said:
‘The probability of a no-deal Brexit has increased significantly.’
GBP traders are also becoming increasingly concerned that the Bank of England (BoE) could be forced into using negative interest rates. Consequently, British markets are worried that the UK could be headed for a slower economic recovery than previously expected.
GBP/USD Outlook: Could Declining UK Consumer Morale Weigh on Sterling?
US Dollar (USD) investors will be looking ahead to tomorrow’s release of July’s US Initial Jobless Claims. If these hold at 1,300 thousand, then we could see the ‘Greenback’ hold steady.
However, any furthers signs that America’s economy or coronavirus situation is heading towards trouble would prove USD-negative. Instead, investors will likely seek out the Euro – the US Dollar’s biggest competitor – instead.
Pound (GBP) traders will be awaiting tomorrow’s release of the latest UK GfK Consumer Confidence figure for July. However, if British consumer morale remains in the doldrums we could see the GBP/USD exchange rate suffer.
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