Pound Sterling US Dollar (GBP/USD) Exchange Rate Muted as USD Rebounds After Worst Drop in Two-Weeks
The Pound Sterling US Dollar (GBP/USD) exchange rate remained flat as traders flocked back to safe-haven currencies. This left the pairing trading at around $1.2321.
The US Dollar made slight gains on Wednesday, as investors flocked back to safe-haven currencies reversing yesterday’s upswing in risk sentiment.
Risk appetite rebounded at the start of the week after a bout of optimism that coronavirus cases in Europe and New York were slowing.
This saw the Dollar suffer its worst drop against its rivals in close to two weeks.
However, risk appetite slumped once again as Eurozone ministers failed to reach an agreement on how to tackle the economic fallout of the virus. This left the pairing flat on Wednesday morning.
Commenting on this week’s movement, Bank of Singapore currency analyst Moh Siong Sim said:
‘It’s a two steps forward, one step back situation.
‘Optimism has been driven by the sense that perhaps the virus is turning for the better. But markets are really concerned about the extent of the economic fallout which is just starting to show up in the numbers.’
Sterling (GBP) Falls as Boris Johnson Spends his Second Night in Intensive Care
The Pound edged lower today as Prime Minister Boris Johnson spent a second night in intensive care due to coronavirus symptoms.
Although, according to health minister, Edward Argar the Prime Minister is ‘comfortable, he’s stable, he’s in good spirits’.
Dollar gains were limited today as there were signs of levelling off in hospitals in New York.
Added to this, as the fatalities in Europe have fallen, there are plans to start easing some of the lockdowns.
Wuhan, where the virus first broke out ended its two-month lockdown on Wednesday. However, a northern town began restricting movement as concerns of a second wave of infections increased.
According to Ray Attrill, head of FX strategy at National Australia Bank:
‘What we see and hear from Wuhan will be quite important for whether any improvement in sentiment can be maintained.
‘There is very keen interest in how willing Wuhan residents are to get out and about, and hope there won’t be evidence of re-infections any time soon.’
Pound US Dollar Outlook: US Jobless Data in Focus
Looking ahead, the US Dollar (USD) could edge higher against the Pound (GBP) if risk appetite continues to fall.
US jobless data is going to be in focus tomorrow afternoon. This will likely reveal a further increase in the number of unemployed Americans.
If US unemployment continues to soar, risk sentiment will suffer and cause the Pound US Dollar (GBP/USD) exchange rate to slump as traders flock to the safety of the ‘Greenback’.