GBP/USD Exchange Rate Sinks as US-China Tensions Buoy Safe-Haven ‘Greenback’
The Pound to US Dollar (GBP/USD) exchange rate dipped by -0.2% today, with the pairing currently fluctuating around $1.24.
The US Dollar (USD) edged higher against Sterling today
However, USD shed some of its gains today after the Federal Reserve said that America’s economic recovery could be ‘levelling off’.
The US Dollar (USD) also benefited from weak Eurozone economic data today, with investors seeking out the safe haven ‘Greenback’ instead. Markets are also becoming increasingly concerned over the growing number of coronavirus cases in Australia.
US-China tensions have also influenced the US Dollar today, with many investors seeking out safe haven currencies as uncertainties grow over the relations between the world’s two largest economies.
Meanwhile, Goldman Sachs cut its US GDP estimate, saying that it now sees the world’s largest economy shrinking by 4.6% in 2020.
Analysts at Goldman Sachs commented:
‘The healthy rebound in consumer services spending seen since mid-April now appears likely to stall in July and August as authorities impose further restrictions to contain virus spread.’
Pound (GBP) Sinks as UK House Prices Fail to Impress Markets
The Pound (GBP) failed to gain today after the UK’s Halifax House Prices fell by -0.1% in June.
Guy Gittins, the managing director of estate agent Chestertons, said that the figures were a ‘clear sign that the housing market is recovering’, adding:
‘This is explained by the lack of properties available to buy, and the sheer number of buyers who have returned since the housing market reopened in mid-May. We saw a 127% increase in offers made on properties in London in June compared to May.’
Meanwhile, Sterling has also suffered over growing fears for the UK’s jobless rate, with reports that the figure could rise by 15% on a possible second wave of the coronavirus.
The Organisation for Economic Cooperation and Development (OECD) said that Britain’s unemployment could soar if the nation experiences a second wave of Covid-19.
The OECD said:
‘In the UK, new online job postings for middle-skill occupations contracted twice as much between February and April 2020 as for low-skill occupations, and 40% more than for high-skill occupations.’
‘These results point to the possibility that the Covid-19 shock will reinforce the existing trend of employment polarisation.’
GBP/USD Forecast: Could the ‘Greenback’ Benefit from Risk-Off Market Mood This Week?
US Dollar (USD) investors will be looking ahead to tomorrow’s release of the MBA Mortgage Applications for July. Any signs of deterioration could drag down the ‘Greenback’ as investors fear the economic outlook for the world’s largest economy.
If risk-sentiment shows any signs of worsening on concerns over a possible second wave of Covid-19, then we could see USD rise.
The Pound (GBP) could edge higher tomorrow if June’s RICS Housing Price Balance shows any signs of improvement. However, if the figure remains in the doldrums then we could see the GBP/USD exchange rate continue to struggle.