GBP/USD Exchange Rate Drops Down as Today’s Session Opens
Today’s GBP/USD exchange rate dropped low in favour of the US Dollar (USD) as risk-on traders are discouraged by the spread of the Covid Delta variant in the UK. Since the session opened, the rate has fallen to $1.3857.
Cable bulls have been subdued lately by a dovish outlook from the Bank of England (BoE) in addition to coronavirus fears.
Pound (GBP) to Trade Low on Renewed Coronavirus Concerns?
The Pound (GBP) failed to maintain yesterday’s upwards streak as unconventional monetary policy exerts pressure and the COVID Delta variant rages around the UK. Newly appointed Health Secretary Sajid Javid failed to reassure Pound investors despite his resolve to stick to July 19th for reopening, as he told the public ‘No date we chose comes with zero risk for covid.’
The recent surge in coronavirus infections saw 22,868 cases reported on Monday, the highest since late January – which may explain traders’ scepticism. Yet Britain’s hospitals have only seen a minor increase in admissions, with deaths holding low. If serious illness and death remain subdued as the vaccination rollout continues, the Pound may yet see some support.
New travel restrictions imposed upon Brits also dampened risk-on mood, as Germany became the latest country to announce intentions of banning British travellers. Concern within the travel sector spiked as analysts warned that the travel industry’s hopes of a good summer were fading, feeding low confidence.
US Dollar (USD) Finds Strength in Risk-Off Mood, Consumer Confidence Predicted to Rise
While concerns over the rapid rise in inflation spooked US Dollar (USD) traders initially, their reservations appear to have been quietened by anticipated consumer confidence figures, alongside an optimistic outlook from the Federal Reserve (Fed).
Economists at Nordea forecast the announcement of a tapering decision in September, ‘potentially with several taper pre-warnings during July and August’, quelling traders’ worries over uncertain monetary policy.
The Conference Board’s Consumer Confidence statistics for June are expected to show increasing sentiment among shoppers, bolstering USD prospects alongside anticipated job growth to be revealed on Friday with the release of Non-Farm Payrolls. Later in the week, the ISM Manufacturing PMI is liable to lift the ‘Greenback’ further if the sector has seen growth as predicted.