GBP/USD Exchange Rate Edges Higher Ahead of US Presidential Inauguration
The Pound to US Dollar rose by 0.4% today, with the pairing currently fluctuating around $1.37.
Today will see the Presidential Inauguration of President-Elect Joe Biden, who will become the 46th President of the United States.
As a result, demand for the safe-haven ‘Greenback’ has slipped owing to rising market sentiment on hopes of even more US stimulus measures being put in place by the Biden Administration.
Simon Harvey, the senior financial market analyst at Monex, Europe, commented:
‘It looks like risk appetite is in better support today. Expectations go back to the idea of a swift fiscal U.S. stimulus.
‘There is an ongoing understanding that there is support for a large fiscal stimulus and wide bipartisan support in the Senate, as opposed to a lengthy reconciliation process.’
Added to this, hopes that US political tensions could ease off once Biden is inaugurated have also weakened demand for the US Dollar.
Pound Rises as UK Inflation Beats Forecasts as UK Shoppers Returned to High Streets in December
The Pound rose today after the release of the latest UK inflation data for December, which beat forecasts and rose by 0.6% as shoppers flocked the high streets last month.
The Office for National Statistics (ONS) commented:
‘Rising transport costs contributed 0.11 percentage points to the monthly change, while increasing prices for clothing, and recreation and culture items both contributed 0.10 percentage points to help increase inflation; these were partially offset by a downward contribution from falling food and non-alcoholic beverage prices.’
GBP investors are also becoming more confident that the UK’s Covid-19 vaccine rollout could help the economy recover in the months ahead.
However, with concerns rising over an extended period of lockdown harming the British economy, GBP traders are remaining largely cautious.
GBP to USD Outlook: Could a Falling UK Covid-19 R-Rate Boost Sterling?
US Dollar (USD) traders will be awaiting tomorrow’s release of the latest US initial jobless claims data.
If this paints a bleak picture for the US labour sector, then we could see demand for the safe-haven ‘Greenback’ return.
However, following the inauguration of Joe Biden, it’s likely we’ll see USD suffer as political stability returns to the world’s largest economy.
Pound (GBP) traders will continue to monitor the UK’s Covid-19 situation.
If this looks increasingly promising, with a falling rate of infections, then the GBP/USD exchange rate will head higher.