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GBP to USD Exchange Rate Steadies as World Markets Turn Eyes to US Presidential Debate

September 29, 2020 - Written by Ben Hughes

The US Dollar’s rebound rally appears to have paused for now, and the British Pound to US Dollar (GBP/USD) exchange rate is calming ahead of what could be a major few sessions for the pair. Markets are highly anticipating tonight’s US Presidential Debate, and Brexit developments could also be hugely influential for the pair in the coming sessions.

After tumbling from the level of 1.2918 to 1.2742 last week, GBP/USD has been trending higher since markets opened yesterday.

While GBP/USD has been unable to recover to last week’s opening levels, it has been steadying around the level of 1.2865 – over a cent above the week’s opening levels. GBP/USD is trending near this level at the time of writing as well.

Notably, GBP/USD is still not far above last week’s two month worst level of 1.2681.

GBP Exchange Rates Unappealing as Coronavirus Continues to hit UK High Street

At the beginning of the week, the Pound experienced a jump in demand. Investors bought the British currency amid speculation that the UK and EU could still reach a breakthrough on Brexit negotiations this week.

However, Sterling lacked the drive to mount a more solid advance as Brexit uncertainties persist. On top of this, Britain’s coronavirus situation remains filled with uncertainties.

Investors are hesitant to buy the British currency today, as more evidence mounts that the coronavirus pandemic will continue to hit UK businesses hard towards the end of the year.

UK chains, including Greggs, Card Factory and Hotel Chocolat have expressed concern with the pandemic’s impact on their businesses today. Greggs has said that it plans to cut employee hours and potentially even jobs in efforts to save costs.

Speaking of Greggs’ issues, Russ Mould, Stockbroker at AJ Bell, said:

‘There remains the risk that recent positive trading momentum cannot be sustained. With the weather turning cold and rainy and unemployment expected to rise, conditions are not favourable for consumer wanting to go out and shop. Local lockdowns also place barriers in the way of Greggs’ recovery efforts.’

News that UK mortgage markets were slowly recovering helped the Pound to avoid losses, but the data was too mixed to notably improve the Pound outlook.

USD Exchange Rates Steady as Markets Await US Presidential Debate

Following a week of strong gains on safe haven demand, the US Dollar has seen more mixed movement today.

The US Dollar is a safe haven currency which is appealing in times of global economic uncertainty. Last week saw coronavirus pandemic fears surge across the globe, particularly in Europe, leading to fears of fresh lockdown or economic impact from the pandemic.

This left the US Dollar surging higher. However the US Dollar has also been benefitting from domestic uncertainty, with the US economic and political outlooks filled with uncertainties.

The US Dollar’s strength has softened since yesterday, as markets focus on this week’s major upcoming US Presidential Debate.

It will be the first televised debate between US President Donald Trump and Democratic Challenger Joe Biden. It will be held during tonight’s American session.

According to Craig Erlam, Senior Market Analyst at OANDA, investors are hesitant to move too much on the US Dollar ahead of the debate:

‘I think there is going to be an overall view of ‘step aside’ as far as today is concerned - sit on the fence, let’s just see how this evening unfolds,’

GBP/USD Exchange Rate Forecast: US Presidential Debate in Focus

This evening’s American session will see the first televised debate of the US 2020 Presidential Election.

The debate between US President Donald Trump and Democrat Party Challenger Joe Biden is expected to be watched across the US.

Analysts predict that if there is a surprising outcome to the debate, it could have a notable impact on the outcome of the upcoming US Presidential Election.

Markets are currently betting that Biden will win the election, but polls are fairly close. If Trump performs better than expected at the debate, uncertainty over the election outcome could intensify.

Higher market uncertainty would actually lead to US Dollar strength, as it continues to benefit from safe haven demand.

As for the Pound, it will be driven by potential Brexit developments. If there are any signs of a breakthrough in UK-EU talks, the Pound could see a surge in demand.

Pound to US Dollar exchange rate investors will also be closely watching tomorrow’s UK growth rate data for a better idea of how the coronavirus pandemic has hit Britain’s economy.
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