Currency News

Daily Exchange Rate Forecasts & Currency News

Pound US Dollar Exchange Rate News: GBP/USD Slips as Covid-19 Cases Surge

December 30, 2021 - Written by John Cameron

GBP/USD Falls as Covid-19 Cases Rocket

The Pound to US Dollar (GBP/USD) exchange rate is dropping in the beginning of today’s session due to coronavirus cases reaching new record heights globally.

At the time of writing, the GBP/USD exchange rate is trading at approximately $1.3458, down around 0.3% on the day’s opening level.

Pound (GBP) Faces Headwinds as Coronavirus Cases Increase

The Pound (GBP) is slipping against the US Dollar (USD) this morning as cases of Covid-19 drastically increase.

On Wednesday, the UK reported 183,037 of daily coronavirus cases, the first publication of figures since December 24th.

Scotland’s first minister, Nicola Sturgeon, said:

‘It is reasonable to assume that we will continue to see steep increases in cases in the days and indeed possibly in the weeks ahead.’

Whilst the frustration continues to mount regarding a lack of available lateral flow tests, UK Health Security Agency boss, Dr Jenny Harris, is urging the public to use the tests they already have, and is hopeful that availability will return to normal after the new year.

Furthermore, the World Health Organisation (WHO) has warned of a ‘twin threat’ from the Omicron and Delta variants which are placing significant pressure on the healthcare system.

As coronavirus cases increase, as do the number of individuals self-isolating, which emphasises the threat of further restrictions imposed by the UK government in the new year, and is dampening Sterling’s appeal.

US Dollar (USD) Boosted by Risk-Off Sentiment

Meanwhile, the US Dollar is gaining against the Pound this morning due to the risk-off mood which is being driven by the increasing number of coronavirus cases.

On Tuesday, the seven-day average of US cases surpassed 267,000, with the newly-identified variant, Omicron, accountable for 59% of infections, an increase of 23% from the previous week.

However, US Centers for Disease Control and Prevention (CDC) have announced that death and hospitalisation numbers for Omicron are low in comparison to the overall coronavirus case numbers.

CDC Director, Rochelle Walensky, said:

‘In a few short weeks Omicron has rapidly increased across the country, and we expect will continue to circulate in the coming weeks. While cases have substantially increased from last week, hospitalizations and deaths remain comparatively low right now.’

Moreover, the ‘Greenback’ has received further support from the US Treasury bond yields, which held above 1.5%.

The two-year yield rose to reach the highest point since the beginning of the pandemic, steered by the hawkish outlook from the Federal Reserve, lifting USD.

GBP/USD Exchange Rate Forecast: Will US Employment Data support USD?

Looking ahead, the Pound US Dollar exchange rate may be influenced by US data scheduled to be released during today’s session.

This afternoon, US initial jobless claims are forecast to increase from 205K to 208K, whilst the 4-week average of jobless claims are predicated to drop from 206.25K to 202K.

USD may also benefit from Chicago’s PMI for December which is expected to increase from 61.8 to 62.

Both USD and GBP are likely to be impacted the evolving coronavirus situation as case numbers continue to rise.

This may further buoy the ‘Greenback’ as risk-off sentiment may continue, boosting demand for the safe-haven currency.

On the other hand, Sterling is vulnerable to coronavirus case numbers due to an absence of data scheduled to be released.

High case numbers of coronavirus may weigh on GBP because it increases the likelihood of the UK government reinstating restrictions after the new year which will hamper the Pound’s potential

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