Pound to US Dollar Exchange Rate Slips from Best Levels but Outlook Remains Higher
Investors continue to sell safe havens as market panic calms, and the Pound Sterling to US Dollar (GBP/USD) exchange rate continues to hit new highs. This week’s coronavirus vaccine news is being seen as a lifeline for Britain’s economy, boosting the Pound (GBP) outlook.
After last week’s impressive jump from the level of 1.2944 to 1.3154, GBP/USD has continued to advance this week so far.
GBP/USD benefits from market sentiment and this morning touched on a high of 1.3292. This was the best level for GBP/USD in two months, since the beginning of September.
Since touching that high, GBP/USD has fallen back slightly. Still, the pair remains strong, over a cent above the week’s opening levels.
Outlooks have cooled lately as political uncertainty has been perceived as calming somewhat. In the coming weeks though, the Brexit outlook could change significantly.
Pound (GBP) Exchange Rates Trending Strongly as Vaccine Hopes Boost Outlook
Following jittery movement for much of the past week, the Pound (GBP) has been strengthening and firming since yesterday.
Market uncertainty has been softening as the US 2020 Presidential Election result becomes clearer and optimistic developments on the coronavirus pandemic unfold.
This week, Pfizer announced that key coronavirus vaccine trails were going well. Reports of safe and effective results led to a surge in hopes that the pandemic could come to an end in the foreseeable future.
After the initial risk-on rally, the news has been benefitting the Pound. According to Marshall Gittler, Head of Investment Research at BDSwiss Group:
‘Since Britain has been disproportionately hit by the virus, it will be disproportionately helped by a vaccine’
US Dollar (USD) Exchange Rates Calming after Tumultuous Week
The US Dollar has been highly volatile for much of the past week. First it saw mixed movement as the unusual US 2020 Presidential Election unfolded, then it was hit as investors sold safe havens on coronavirus vaccine hopes.
However, the safe haven US Dollar has since begun to steady.
Markets are tempering expectations for the coronavirus vaccine, especially amid concerns over how the drug could be distributed around the US.
What’s more, while there is optimism around the vaccine, coronavirus cases are currently worsening in major economies around the globe. This is offering resilient support for the safe haven US Dollar.
According to Charalambos Pissouros, Senior Market Analyst at JFD Group:
‘With the global daily infections from the coronavirus accelerating yesterday, it seems that concerns over the pandemic’s economic impact may have limited further gains in equities and other risk-linked assets,
It is still too early to start cheering that the covid era is behind us,’
Pound to US Dollar (GBP/USD) Exchange Rate Outlook Looks to Brexit Developments
The Pound to US Dollar exchange rate outlook has become more optimistic as markets calm from the political panic of recent weeks.
However, as markets look ahead to the rest of the year, there is potential for even further gains for the Pound.
UK and EU officials expect some kind of Brexit deal will be reached by the end of the month. If there are Brexit developments next week like some speculate, the Pound could be in for further gains soon.
Optimistic Brexit news will leave the Pound outlook stronger. Of course, any signs of talks failing or a no-deal Brexit would have the opposite effect and leave the Pound shedding much of its recent gains.
Brexit news is the focus for the Pound outlook, but notable data in the coming days could also influence the Pound and US Dollar.
UK growth rate data could boost the Pound outlook if it beats expectations, as economic optimism has been buoyed by coronavirus vaccine hopes.
US inflation and confidence data is unlikely to be as influential, but it could still cause some late-week Pound to US Dollar (GBP/USD) exchange rate movement.