Currency News

Daily Exchange Rate Forecasts & Currency News

Pound to US Dollar Exchange Rate Rangebound as Uncertainty Grows Over US Covid-19 Stimulus

October 12, 2020 - Written by John Cameron

GBP/USD Exchange Rate Steady as US Political Developments Remain in Focus



The Pound to US Dollar (GBP/USD) exchange rate held steady today, with the pairing currently fluctuating around $1.304.

The US Dollar (USD) remains under pressure as risk-on mood persists over the possibility of a comprehensive US Covid-19 stimulus package to bolster the American economy.

This follows hopes that talks between the Democrats and the Republicans will continue despite President Donald Trump’s tweet of a delay to stimulus until after November’s Presidential election.

Meanwhile, Republicans in the US Senate have been reported to go along with what President Trump wants when it comes to Covid-19 stimulus.

White House press secretary, Kayleigh McEnany, told Fox News:

‘I believe Senate Republicans will ultimately come along with what the president wants - the president noted that yesterday. We believe Senate Republicans are not what’s blocking this. It is Democrats.’

The US Dollar (USD) will remain sensitive to US political developments this week, with few economic releases due out until Tuesday.

Advertisement

Pound (GBP) Steady as Parts of North-England Enter Tier 2 Stage to Curb Covid-19 Infection Rates



The Pound (GBP) failed to gain against the ‘Greenback’ today following an announcement that sections of the North-East of England, including Greater Manchester, would enter a Tier 2 stage to curb the spread of Covid-19.

Consequently, Sterling investors are becoming more concerned that the rising coronavirus infection rate could further impact Britain’s increasingly fragile economy.

Today also saw the Bank of England (BoE) drop some hints that it could be taking interest rates into negative territory.

As a result, GBP investors have become more concerned for the British economy going forward.

Sam Woods, one of the deputy governors at the Bank of England, sent a letter to banks, asking:

‘As part of this work, we are requesting specific information about your firm’s current readiness to deal with a zero bank rate, a negative bank rate, or a tiered system of reserves remuneration – and the steps that you would need to take to prepare for the implementation of these.’

Meanwhile, uncertainty over Brexit has held back the Pound today, with no further signs of progress towards a post-Brexit trade deal coming from either the EU or Downing Street.

GBP/USD Forecast: Could Stabilising US Political Developments Weaken the US Dollar This Week?



Sterling traders will be looking ahead to tomorrow’s release of August’s UK ILO Unemployment Rate report.

Any signs of an unprecedented level of joblessness in the months ahead would prove GBP-negative.

Tomorrow will also see the release of the latest UK Claimant Count Change data for September.

If this paints a bleak picture for UK employment in the months ahead, then we could see Sterling suffer.

US Dollar (USD) traders will be looking ahead to tomorrow’s release of US inflation data for September.

Any indications that the American economy is struggling would buoy safe-haven demand for the ‘Greenback’.

The GBP/USD exchange rate will continue to be dictated by pre-US Presidential election developments.

If Democrat candidate Joe Biden’s position looks increasingly secure, the US Dollar could begin to struggle as risk-sentiment improves.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.


TAGS: Pound Dollar Forecasts

Comments are currrently disabled