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Pound to US Dollar Exchange Rate Highly Volatile as Brexit and US Political Uncertainty Intensifies

Pound to US Dollar Exchange Rate Sees Morning Jump despite Safe Haven Demand

Global political uncertainty has already had a turbulent week, and the Pound Sterling to US Dollar (GBP/USD) exchange rate has been highly volatile. Uncertainty has only worsened since last night, as US President Donald Trump reportedly contracted the coronavirus Covid19.

Since opening this week at the level of 1.2741, GBP/USD has been trending with an upside bias. Slightly weaker safe haven demand helped the pair to recover some of last week’s losses.

However, while GBP/USD has recovered last week’s losses at points, the pair remains under pressure. At the time of writing, GBP/USD is seeing volatile movement but once again trends near last week’s opening levels, in the region of 1.2930.

Both UK-EU Brexit talks and the 2020 US Presidential Election are in the balance. As a result, markets will focus down on UK and US political developments in the coming sessions.

Pound (GBP) Exchange Rates Climbing on Hopes for Weekend Brexit Breakthrough

Following wide fluctuations yesterday, the Pound (GBP) is climbing this morning.

Mixed reports over whether UK-EU Brexit negotiations were close or far from reaching s breakthrough yesterday saw the Pound surge, then plummet, then jump again.

This morning, the highly volatile currency is once again climbing on Brexit hopes.

News of a weekend meeting between UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen has been seen as a positive sign by Pound investors.

According to Jordan Rochester, Forex Strategist at Nomura:

‘This meeting is what sterling longs needed,

With each (Brexit news) headline you get sucked in to put trades on and within minutes a denial comes in and it turns either way.’

This morning’s gains are likely to be limited as well, as uncertainty is still the biggest factor in the Brexit outlook.

US Dollar (USD) Exchange Rates Strengthen as Markets Seek Safe Havens

Last night, global markets were shaken by the shock news that US President Donald Trump had contracted the coronavirus Covid19.

With not long before the 2020 US Presidential Election, uncertainty about the election surged. Investors rushed to safe havens amid concern that President Trump’s health could be hit hard by the virus and cause complications in the election itself.

According to Chris Weston, Head of Research at Pepperstone:

‘The President of the United States has got a disease which kills people. People are de-risking because of that,

But we’re not sure how much this changes the election. The prospect of Donald Trump surviving this is incredibly high,’

The US Dollar’s gains were limited though, as the issue affects the US in particular. Investors found other safe havens, like the Japanese Yen (JPY) comparatively more appealing.

Pound to US Dollar (GBP/USD) Exchange Rate Awaits Major Political Developments

The Pound to US Dollar (GBP/USD) exchange rate is likely to remain highly focused on politics in the coming sessions, with the Brexit process and US Presidential Election at critical points.

The weekend’s talks between UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen could lead to a breakthrough. A breakthrough or extension of talks could leave the Pound surging when markets open again on Monday.

Meanwhile, US Dollar investors will be focused on developments regarding the health of US President Donald Trump. If Trump’s coronavirus illness leads to changes in the election, the US Dollar could benefit more from market safe haven demand.

These issues are only likely to see stronger and stronger focus for the Pound to US Dollar (GBP/USD) exchange rate outlook.