The GBP/USD pair has been recovering amid Britain’s vaccine rollout, and comments from BoE Governor, Andrew Bailey.
The pair is currently trading around $1.3622.
Pound (GBP) Gains as Vaccine Rollout is Implemented
The Pound (GBP) was supported today following on from comments from the Andrew Bailey this morning.
Although Bailey said the economy is in a ‘very difficult period,’ in an online speech, he went on to downplay any notion that the BoE could deploy negative interest rates in order to support the UK economy.
‘In simple economics and maths terms, there is nothing to stop it at all. However there are a lot of issues with it. No country has used negative rates in ‘retail’ end of the financial market.’
However he did suggest that the economic impact of the latest lockdown looks to be less extreme than the first lockdown at the beginning of 2020.
But with worries that the public are not following lockdown restrictions, Chief of Met Police, Cressida Dick issued a stark warning today saying that:
‘It is preposterous to me that anyone could be unaware of our duty to do all we can to stop the spread of the virus.’
‘We have been clear that those who breach Covid-19 legislation are increasingly likely to face fines.’
If the public to not listen to repeated statements about following the lockdowns tighter or longer restrictions could be imposed– potentially weakening the Pound
US Dollar (USD) Dips as Increased Fiscal Stimulus Underpins Greenback
The US Dollar (USD) struggled today as investors kept an eye on US politics while pressure continues to grow to impeach President Donald Trump.
Furthermore, with downcast US Dollar demand, a continuing strong rally in the US Treasury bond yields, although positive for the US Dollar, continues to undermine the US Dollar to Pound exchange rate.
President-elect Joe Biden, whose inauguration is just over a week away, is expected to announce plans for ‘trillions’ in new relief bills, which will add pressure to the USD exchange rates.
Pound to US Dollar (GBP/USD) Exchange Rate Forecast
Pound (GBP) investors will continue to focus on any further coronavirus developments if we see infection rates soaring despite the lockdown, Sterling would suffer.
However, if the Covid-19 vaccine programme speeds up, opening up the idea that the economy can be reopened for mid-February, will likely prove GBP-positive.
For US Dollar (USD) investors US politics will remain a key focus, with growing expectations that fiscal stimulus will drive down the Greenback further as risk appetite increases.