Pound Sterling US Dollar (GBP/USD) Exchange Rate Slides on Record US Coronavirus Infections
The Pound Sterling US Dollar (GBP/USD) exchange rate slumped on Wednesday morning. This left the pairing trading at around $1.2479.
Concerns over a second wave of the coronavirus pandemic has hit markets today. Cases seem to be on the rise after seven US states saw a spike in cases on Tuesday.
For a second week, Texas, Arizona and Nevada saw record-levels of new infections while 10 other states struggled with outbreaks.
Commenting on the coronavirus cases in the US, RBC Capital Markets’ Chief U.S. Economist, Tom Porcelli said:
‘We expect over the coming couple of weeks as we get more clarity on this, state Governors will be in a better position to decide how to proceed. For now, we have not seen any negative shift in consumer behaviour as a result.’
This weighed on the Pound, although the Dollar remained under pressure against a handful of currencies after Tuesday’s upbeat data sparked an increase in risk appetite. Hopes for a global economy recovery drove investors towards riskier assets.
Comments from the country’s Treasury Secretary, Steven Mnuchin flagging further fiscal stimulus which aims to get people back to work has also helped support market sentiment.
Pound (GBP) Tumbles on Brexit Trade Deal Uncertainty
Sterling slumped against the US Dollar today during early trading on Wednesday. Brexit uncertainties weighed on the currency despite the surge in risk appetite.
Upbeat PMI data from Europe, the United States and Britain added to hopes that growth is returning after the coronavirus crisis as countries begin to ease lockdowns.
Britain’s Prime Minister also unveiled new easing measures to take place across England from 4 July. This includes the reopening of pubs and restaurants.
However, in an open letter in the British Medical Journal signed by top medics warned the government that local flare-ups of the virus are likely and a second wave is a risk.
In a note to clients, ING strategists wrote:
‘[Lifting the UK lockdown] does not alter the key GBP driving factor – the uncertainty about the UK-EU trade deal.
‘GBP to remain the European FX underperformer, despite the benign risk appetite.’
Pound US Dollar Outlook: US GDP in Focus This Week
Looking ahead, the Pound (GBP) could edge higher against the US Dollar (USD) following the release of data from the Confederation of British Industry (CBI).
If the CBI’s latest data shows the pace in decline of trades has slowed once again, it could offer Sterling some support.
However, the United States’ latest growth data could weigh on risk appetite and send traders flocking to safety.
US GDP is expected to slump by -5% in the first three months of 2020, although if the final reading is worse than forecast, the Pound US Dollar (GBP/USD) exchange rate will slide.