Pound to US Dollar Exchange Rate Struggles to Hold Ground as Market Sentiment Improves
Updated 16:40 BST 06/04/2020:
As Britain’s coronavirus outlook remained mixed, the Pound Sterling to US Dollar (GBP/USD) exchange rate struggled to sustain any major gains.
Still, the US Dollar’s (USD) appeal was limited. Signs that the coronavirus pandemic was slowing made investors more willing to take risks, limiting support for safe havens like the US Dollar.
The Pound remained under pressure due to concerns over the health of UK Prime Minister Boris Johnson and a lack of supportive UK news lately.
However, overall the Pound to US Dollar (GBP/USD) exchange rate has been able to avoid losses today. The pair still trends close to the week’s opening levels of 1.2269 at the time of writing.
(Originally published 10:06 BST 06/04/2020)
Pound to US Dollar Exchange Rate Avoids Losses despite Boris Johnson Hospitalisation
The Pound to US Dollar (GBP/USD) exchange rate is off to a mixed start this morning. Sterling’s (GBP) outlook saw fresh uncertainty as UK Prime Minister Boris Johnson was admitted to hospital on coronavirus symptoms. Meanwhile, the US Dollar’s (USD) appeal is limited.
After seeing a surge in demand towards the end of March, GBP/USD movement was steadier last week.
Fresh safe haven demand left GBP/USD sliding throughout the week. The pair ultimately tumbled from 1.2453 to 1.2269 throughout the week. This fall was fairly modest compared to previous gains, meaning GBP/USD had sustained a decent recovery from its worst levels.
At the time of writing on Monday, GBP/USD saw mixed movement near the week’s opening levels. GBP/USD currently trends just slightly higher in the region of 1.2288.
Pound (GBP) Exchange Rate Outlook Limited as Boris Johnson Hospitalised
Investors briefly sold the Pound this morning. Sterling fell amid reports that UK Prime Minister Boris Johnson had been admitted to hospital for tests due to his coronavirus symptoms.
The news briefly caused market panic and uncertainty over the British leader’s health and the future of his government.
However, Sterling demand rebounded slightly later in the morning. This was due to comments from UK officials assuring that the Prime Minister was likely to return to office before too long.
According to Jasper Lawler, Head of Research at London Capital Group:
‘News that Prime Minister Boris Johnson was admitted to hospital saw the British Pound dip, only to recover quickly since it seems it was just precautionary,
Risks to UK sentiment could re-emerge if Boris’s hospital stay extends for a few days leaving a leadership vacuum behind.’
US Dollar (USD) Exchange Rate Outlook Dampened by Last Week’s Shocking US Data
The Pound was able to more easily avoid losses this morning, as market demand for the US Dollar was limited.
Global markets were shocked last week by a slew of horrible US job results. Jobless claims saw unprecedented rockets and the US Non-Farm Payrolls report confirmed that unemployment was surging.
Analysts called some of last week’s US job stats among the worst single data figures in history.
Not only has the latest US data been heavily concerning though, market safe haven demand is also damper this week so far.
The US Dollar is a safe haven currency that is typically resilient in times of market uncertainty. This week has seen signs that the number of coronavirus deaths are slowing in Italy and France, which has made investors a little more willing to take risks again.
Pound to US Dollar (GBP/USD) Exchange Rate Could Sustain More Gains
If the Pound outlook steadies slightly, it is more likely to sustain a recovery against the US Dollar.
Sterling movement is likely to steady if UK Prime Minister Boris Johnson smoothly returns to office following his hospitalisation today.
Following this, the Pound outlook could see further support if Britain’s coronavirus outlook shows any solid signs of improvement. Markets are still speculating that the UK Treasury will further ramp up fiscal stimulus measures to protect the economy.
The US Dollar, on the other hand, may continue to see limited support if the global coronavirus outlook shows more signs of improvement.
Investors are less likely to want safe haven currencies if death tolls show signs of slowing, for example. On top of this, poor US data is only likely to keep weighing heavier on the US Dollar if safe haven demand softens.
Overall, the Pound to US Dollar (GBP/USD) exchange rate outlook could keep recovering if global economies get better at handling the coronavirus pandemic.