Pound to US Dollar Exchange Rate Lacks Drive amid Brexit and Coronavirus Uncertainty
After shocking developments and broad volatility last week, the Pound Sterling to US Dollar (GBP/USD) exchange rate’s movement has calmed today. Investors are now awaiting more info on the health of US President Donald Trump.
Brexit hopes carried GBP/USD higher last week, despite some safe haven demand. GBP/USD opened last week at the level of 1.2742 and trended higher throughout the week, eventually closing the week at the level of 1.2937.
GBP/USD was unable to hold last week’s high of 1.2975, but the pair is attempting to climb again this morning. At the time of writing, GBP/USD is trending near the level of 1.2945.
Uncertainty over politics in the coming month are limiting market demand for both the Pound (GBP) and US Dollar (USD).
Pound (GBP) Exchange Rates Find Support in Data, Brexit Hopes
The Pound has seen mixed movement today. Investors sold the British currency when markets first opened, amid concerns that Brexit uncertainty was set to last another month.
However, investors have been buying the British currency more this afternoon.
While this is partially due to losses in the US Dollar, today’s UK news has also supported the British currency.
This morning’s UK services PMI showed the services industry performed better than expected in September. The figure came in at 56.1.
On top of this, markets were also hopeful that an extension in UK-EU Brexit negotiations could lead to some kind of deal breakthrough over the coming month.
US Dollar (USD) Exchange Rates Slip Back as Markets Cool from Last Week’s Panic
Last Friday, it was reported that US President Donald Trump had contracted the coronavirus Covid19. The shock left markets rushing to buy safe havens, which left the US Dollar stronger against many major rivals.
However, amid speculation that President Trump is in good health, investors have been more willing to take risks again since markets opened this week.
This has left the US Dollar weaker on Monday, as markets calm and sell the safe haven US currency back from its best levels.
Still, the US Dollar outlook is volatile overall. Concerns about the future of the US election if Trump remains poorly are also keeping the US currency jittery. According to Jane Foley, Senior FX Strategist at Rabobank:
‘The jury is out. There isn’t a clear consensus on how the Dollar should trade on this degree of political uncertainty in the US,’
Pound to US Dollar (GBP/USD) Exchange Rate Focused on Political Outlook
While markets are currently calming slightly from last week’s Brexit and US Election uncertainties, these factors remain a major factor for the Pound to US Dollar exchange rate outlook.
UK-EU Brexit negotiations will go on for another month, but will remain a big focus for the Pound. Amid a lack of notable UK ecostats due for publication tomorrow, Pound investors will be awaiting potential Brexit news or reacting to rival movement.
The US Dollar, on the other hand, is more likely to drive GBP/USD movement, depending on the health of US President Donald Trump.
If Trump appears to be handling the coronavirus illness well and there are signs his health is improving, markets will be more willing to take risks again. This could leave the safe haven US Dollar weaker.
Tomorrow will also see the publication of US trade balance and job opening stats, which could also influence the Pound to US Dollar (GBP/USD) exchange rate outlook if they surprise investors.