Pound to US Dollar Exchange Rate Slides as ‘Second Wave’ Fears Become Focus
The Pound to US Dollar (GBP/USD) exchange rate has seen increasingly volatile movement this week. After attempting to advance, the pair fell overnight as investors looked to safe havens. If coronavirus fears worsen, safe haven demand could rise further.
Since opening this week at the level of 1.2348, GBP/USD quickly begun to recover from its lowest levels since May.
GBP/USD briefly touched on a new June low of 1.2337 before rebounding. However, after reaching a weekly high of 1.2539 last night, GBP/USD tumbled again.
At the time of writing on Thursday morning, GBP/USD is trending near the level of 1.2410.
Increasingly Risky Pound (GBP) Exchange Rates Lack Support
A wide variety of factors are weighing on the Pound (GBP) outlook. Concerns over the UK government’s handling of coronavirus and Brexit persist.
As these factors weigh on the Pound, investors have brushed over solid UK data. In fact, some analysts are perceiving the Pound as an increasingly risky buy.
With Sterling being more correlated with risk-sentiment, it is being hit lower by fears over surging coronavirus cases in the US.
US Dollar (USD) Exchange Rates Benefitting from Safe Haven Demand
The US Dollar’s (USD) appeal has been mixed in recent weeks.
Relatively low market demand for safe haven currencies amid risk-on movement, as well as concerns over the US handling of the coronavirus, dampened the US Dollar’s appeal.
While a surge of coronavirus cases in the US is weighing on the US Dollar slightly too, a rise in safe haven demand is the main cause of movement today.
Fearing a global ‘second wave’ of the pandemic, investors are eagerly buying assets seen as safe. This includes the US Dollar, which has seen solid gains against rivals since last night.
Pound to US Dollar (GBP/USD) Exchange Rate Awaits Key US Data
This afternoon will see the publication of major US datasets. Q1’s final US growth rate report will be published, as will May’s durable goods orders stats and wholesale inventories.
The latest US jobless claims will also be published.
If the data beats expectations, it could bolster hopes for the US economy’s resilience.
However, if coronavirus ‘second wave’ fears continue to worsen, US economic concerns are likely to persist.
The Pound to US Dollar (GBP/USD) exchange rate is more likely to be driven by shifts in global risk-sentiment.