GBP/USD Exchange Rate Sinks as Demand for Safe-Haven USD Rises as Global Covid-19 Cases Increase
The Pound US Dollar exchange rate dipped today as demand for the safe-haven ‘Greenback’ has risen on growing fears of Japan’s and India’s rising Covid-19 cases. The pairing is currently trading around $1.39.
The US Dollar (USD) has benefited from souring risk sentiment after it was revealed that India had suffered 2,000 deaths in 24-hours due to a surge in Covid-19 cases.
Global coronavirus cases have hit a weekly record this week despite the rollout of coronavirus vaccinations.
Analysts at Bloomberg commented:
‘The global death toll is also resuming momentum. Fatalities have increased for the past month and were about 82,000 the week ended April 18, an average of almost 12,000 a day. That’s up from just over 60,000 in the week ended March 14, or about 8,600 a day, the most recent nadir.’
The US Dollar has also benefited from a moderate pickup in US Treasury yields, despite being well below their recent 14-month highs.
Pound (GBP) Dips Despite Rising UK House Prices
The Pound (GBP) failed to rise against the US Dollar (USD) today despite UK house prices rising at their fastest rate since 2014.
Nicky Stevenson, the managing director at the national estate agent group Fine & Country, commented on the home sales news:
‘The property market remains in a parallel universe at odds with the wider reality everyone has been living.
‘It’s been a gloom-defying 12 months, given that last March, when the first lockdown arrived, the market seized up, mortgage products were withdrawn and everyone held their breath.’
As a result, GBP investors have become more confident about the UK’s economic recovery now that some lockdown restrictions have been lifted.
UK inflation has also risen by 0.7% in march after dipping to 0.4% in February.
Office for National Statistics official Jonathan Athow said:
‘The rate of inflation increased with petrol prices rising and clothes recovering from the falls seen in February.’
The British economy is now expected to recover as Covid-19 infections remain low compared to earlier this year.
Added to this, the reopening of non-essential shops is expected to help ease levels of unemployment and boost the economy in the coming months.
Pound US Dollar (GBP/USD) Exchange Rate Forecast: Could Upbeat UK Consumer Morale Boost Sterling?
US Dollar (USD) investors will be awaiting tomorrow’s release of April’s US Initial Jobless Claims data.
Any signs of rising unemployment in the US, however, could undermine the ‘Greenback’s strength.
However, if risk sentiment continues to sour due to rising global Covid-19 cases, then the USD/GBP exchange rate could head higher.
The Pound US Dollar (GBPUSD) exchange rate could head higher tomorrow, however, if the latest UK Consumer Confidence report for April improves on the previous month.