Pound US Dollar Exchange Rate Set to Weaken Amid Brexit and Coronavirus Concerns?
The Pound US Dollar (GBP/USD) currency pairing is expected to dip going forwards, as ongoing Covid concerns add to Britain’s woes over the Northern Ireland Protocol.
At the time of writing the GBP/USD pairing is trading at $1.3804, down roughly 0.3% from today’s opening rate.
Pound (GBP) Unlikely to Sustain Five-Day High as Covid and Brexit Concerns Resurface
While Boris Johnson’s reopening announcement has hitherto buoyed sentiment around the Pound (GBP), health officials have question the decision, observing that ‘by 19 July it’s quite likely there’ll be 50,000 cases a day and when we do take off the restrictions it will make the conditions for transmission of the virus even more favourable.’ This questioning has introduced fresh doubt into the equation.
Meanwhile, tensions between Britain and the European Union (EU) are rising again as inflammatory comments fly from Northern Ireland and Brussels. In response to Brexit Minister Lord Frost’s criticism of EU negotiation tactics, the European Commission Vice President has threatened legal proceedings against the UK, warning that ‘trust is a two way street.’
If the UK fail to implement trade measures soon, as agreed with the European Union, it’s likely that tensions could increase further still, undermining future trade talks and sapping Sterling sentiment.
US Dollar (USD) Set to Gain from Risk-Off Mood
The US Dollar (USD) has mustered some support today as concern over the spread of the coronavirus Delta variant persists, favouring risk-off trading.
The publication of a lower-than expected PMI report this afternoon has also fed into a bearish market sentiment that favours the safe-haven currency. ‘Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions,’ says Anthony Nieves, Chair of the ISM, inspiring caution.
US Dollar trading is likely to hold steady until tomorrow, when attention will turn to the FOMC minutes. The data release may demonstrate less hawkishness than expected, remarks Barbara Rockefeller of FXStreet, given last Friday’s poor Nonfarm Payrolls data:
If this is the case, USD gains are likely to be capped.