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Pound to US Dollar (GBP/USD) Exchange Rate Falls Despite Rising American Covid-19 Cases

June 29, 2020 - Written by John Cameron

GBP/USD Exchange Rate Dips Despite Rising Covid-19 Vaccine Hopes

The Pound to US Dollar (GBP/USD) exchange rate dipped today, with the pairing currently trading around $1.23.

The US Dollar (USD) edged higher against Sterling today despite growing fears that America could see renewed lockdown measures on ever-increasing Covid-19 cases.

As a result, some ‘Greenback’ investors are feeling concerned that America’s economy could be severely compromised in the second quarter.

Nevertheless, as the global economy continues to struggle from the coronavirus pandemic, many investors have flocked to safe-haven currencies like the US Dollar and Swiss Franc.

Meanwhile, investors are becoming more hopeful about a possible Covid-19 vaccine.

After reports that a company in Beijing had reported some success in candidate trials, risk sentiment has improved seeing some investors seek out riskier assets.

In US economic news, today saw the release of the US Pending Homes Sales report for May, which beat forecasts and rose from -21.8% to 44.3%. As a result, some USD investors are becoming more optimistic about America’s economic recovery.

Pound (GBP) Dips as Brexit Woes Return

The Pound (GBP) struggled today following reports that Number 10 had signalled the end of September as a deadline to UK-EU trade talks with the European Union.

David Frost, the UK’s Chief Brexit Negotiator, commented:

‘We need to make sure businesses can prepare properly for what will happen at the end of the year, if these negotiations go on too long into the autumn, they won’t know what to prepare for.’

‘I think we have spoken in the past about not wanting to be continuing having talks in October.’

Consequently, GBP investors are becoming increasingly concerned that negotiations between the UK and the EU could break down and lead to a possible no-deal exit in December.

In UK economic news, today saw the UK’s mortgage approvals for May fall from 15,851 to 9,273.

According to Reuters, this only further underscored ‘the scale of the hit to the housing market from the coronavirus lockdown’.

Last week saw Rishi Sunak the Chancellor of the Exchequer, say that UK consumer confidence would be the key to the UK’s economic recovery. Furthermore, with lockdown restrictions easing, we could see Britain’s housing sector improve in the coming months.

GBP/USD Forecast: Could Improving Risk Sentiment Buoy the Pound this Week?

Sterling traders will be looking ahead to tomorrow’s release of the final GDP figure for the first quarter. Any signs of improvement in Britain’s economic growth would prove GBP-positive.

Tomorrow will also see the release of the UK’s Total Business Investment gauge for the first quarter. We could see an uptick in the GBP/USD exchange rate if this shows positive sighs of recovery for the British economy in the months ahead.

The US Dollar (USD) could suffer this week if risk sentiment shows any signs of improvement. As a result, we could see the GBP/USD exchange rate begin to edge higher.

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