GBP/USD Exchange Rate Falls as Democrats Secure US Senate
The Pound to US Dollar (GBP/USD) exchange rate fell by -0.5% today, with the pairing currently trading around $1.355.
The US Dollar (USD) rose today following the news that the US Democrats had claimed the US Senate, paving the way for more Covid-19 stimulus measures.
However, despite this news weakening demand for the safe-haven ‘Greenback’, the USD/GBP exchange rate remains strong as concerns over growing American Covid-19 cases has dampened risk sentiment.
Today also saw the release of December’s US ISM Services PMI, which beat forecasts and rose by 57.2.
Analysts at Reuters commented on the data:
‘U.S. services industry activity accelerated in December, but sky-rocketing COVID-19 infections depressed employment, heightening the risk that the economy shed jobs for the first time since the labor market recovery from the pandemic started.’
In other US economic news, today saw the latest US jobless claims fall from 790 thousand to 787 thousand.
However, Eliza Winger, an economist at Bloomberg, warned:
‘With the number of virus cases surging, there is a potential for rapid spread in localized shutdowns. Deeper deterioration in the near term will lead to a more pronounced bounce back, but can ultimately leave more workers permanently displaced.’
Pound (GBP) Struggles as UK Covid-19 Cases Continue to Rise
The Pound (GBP) struggled to gain against the ‘Greenback’ today following reports that UK Covid-19 cases are continuing to rise.
Today saw reports that there has been a 24% rise in people testing positive for the coronavirus.
Meanwhile, UK GP surgeries and pharmacies are due to offer the new Oxford/AstraZeneca Covid-19 vaccine, providing hope that the Government could vaccinate larger swathes of the vulnerable by mid-February.
Prime Minister Boris Johnson said:
‘After the marathon of last year we are indeed now in a sprint, a race to vaccinate the vulnerable faster than the virus can reach them. “Every needle in the arm makes a difference.’
In UK economic news, today saw the release of the latest UK Construction PMI for December, which buoyed confidence in the British construction sector at 54.6.
Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply, said:
‘Some positive news for the construction sector in December as the uplift from summer’s close continued through to the end of 2020 and new order levels increased for the seventh successive month. Long-term prospects came to fruition and halted projects started again as clients became more optimistic after the Covid hiatus. To meet this demand head-on, builders opted for job creation for the first time in 21 months to increase previously pared-back capacity.’
GBP/USD Outlook: Could UK Covid-19 Vaccine Hopes Boost Sterling This Week?
US Dollar (USD) traders will be awaiting tomorrow’s release of the latest US Nonfarm Payrolls data for December.
Any signs of a recovery in the US economy would further compromise demand for the safe-haven ‘Greenback’.
Tomorrow will also see the release of December’s US Unemployment Rate.
If this continues to rise, however, we could see US markets become more jittery.
The GBP/USD exchange rate could head higher this week, however, if the UK Governments mass vaccination programme looks like it could meet its mid-February target.