GBP/USD Exchange Rate Rises as Covid-19 Vaccine Hopes Drags Down Safe-Haven US Dollar
The Pound to US Dollar (GBP/USD) exchange rate rose by 0.4% today, with the pairing currently trading around $1.285.
The US Dollar (USD) has suffered from a positive risk-on tone today after the pharmaceutical giant, AstraZeneca, said it had resumed trials for their Covid-19 vaccine.
Pfizer CEO Albert Bourla also said that a coronavirus vaccine could be given to Americans before the end of the year.
Consequently this has limited demand for the safe-haven ‘Greenback’ as hopes of a Covid-19 vaccine restores confidence in a semblance of stability in the global economy before 2020 closes.
Professor Peter Openshaw, of Imperial College London, was more sceptical, however, saying:
‘With all the vaccine trials now coming through which are scheduled to deliver a result within the next few months, I do feel that on the basis of what we know about the immune system that it’s likely that these immune responses that are being induced by these vaccines may be protective for at least a few months, possibly even years, we just don’t know yet, it’s early days.
‘Before the winter of 21/22 I hope that we should have vaccines that are effective.’
The USD/GBP exchange rate will, however, likely remain subdued as risk-on market mood continues to weigh on safe-haven assets.
Pound (GBP) Edges Higher as UK Markets Brace for Parliamentary Vote on Brexit Bill
The Pound (GBP) headed higher against its peers today as UK markets brace for the UK’s Parliamentary vote on the Brexit Internal Market Bill.
Any signs of disagreement on the bill would prove GBP-negative. Fears of a no-deal Brexit would limit the appeal of Sterling.
Former Prime Minister David Cameron warned again Prime Minister Boris Johnson’s Brexit bill, saying:
‘Passing an act of parliament and then going on to break an international treaty obligation is the very, very last thing you should contemplate. It should be an absolute final resort. So, I do have misgivings about what’s being proposed.’
Meanwhile, the UK has entered a new phase in its Covid-19 restrictions. The ‘rule of six’ means that only a maximum of six people can gather, as recommended by British authorities.
Nevertheless, this has sparked concern for the British economy. The new ruling will particularly affect restaurants and pubs.
GBP/USD Forecast: Could Sterling Fall on Hard Brexit Fears?
Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK ILO Unemployment Rate report. If this increases, then we could see Sterling fall against the ‘Greenback’.
Brexit developments will remain in focus. As a result, the GBP/USD exchange rate could fall over the next few days if Parliament accept the amended Brexit Bill. As a result, Sterling would suffer as the likelihood of a hard Brexit this year would increase significantly.
The US Dollar (USD) could edge higher this week if US-China trade relations continue to deteriorate. Consequently investors would seek out safe-haven assets as tensions increase between the world’s two largest economies.
The GBP/USD exchange rate will remain volatile this week as uncertainty over Brexit grows. Any indications that the UK could be heading for a hard Brexit at the end of the year, therefore, would prove GBP-negative.