Pound to US Dollar Exchange Rate Slumps as UK Lockdown Fears Intensify
Rising signals that the UK government could send Britain into another lockdown is leading to Pound Sterling to US Dollar (GBP/USD) exchange rate losses today. Concerns over Britain’s economy and the Brexit process are further weighing on the Pound (GBP).
Following its early September plummet, GBP/USD attempted to rebound slightly last week. After opening last week at 1.2796, just above a month and a half low of 1.2766, GBP/USD attempted to rebound.
Its gains were limited though, and GBP/USD ultimately closed the week near the level 1.2918.
This week so far, GBP/AUD attempted to keep edging higher before being hit by the latest concerns that Britain could be dragged into a second national coronavirus lockdown. GBP/USD currently trends near the level of 1.2845 again.
The US Dollar (USD) outlook remains mixed as well, due to US economic and political uncertainties.
Pound (GBP) Exchange Rates Hit by Fears of Second Coronavirus Lockdown
The Pound outlook may be hit by even further uncertainty soon. Speculation of a second UK lockdown to limit the spread of the coronavirus pandemic is hurting the Pound today.
Signals from UK officials have been rising over the weekend. Today, Britain’s Chief Medical Officer will give a press release and is expected to say that Britain is at a ‘critical point’ in the pandemic.
According to Analysts at ING:
‘Increasingly widespread speculation about a possible re-introduction of more restrictive measures in London – in sharp contrast with the latest ‘back to work’ encouragement by the government – is just another factor suggesting Sterling is one of the least attractive G10 currencies on a risk-reward perspective,’
Brexit uncertainties also persist. The UK government’s bill to rewrite the Brexit withdrawal agreement is still expected to pass this week.
US Dollar (USD) Exchange Rates Steady as Markets Await Federal Reserve Comments
The safe haven US Dollar has been unable to capitalise on the recent rise in global coronavirus fears. This is due to concerns about the US coronavirus outlook, as well as the nation’s economic and political jitters.
With the US Presidential Election approaching in November, and the US economy still being hit by the coronavirus pandemic, economic and political uncertainties have been weighing heavily on the US Dollar.
Last week’s Federal Reserve policy decision was largely unsurprising, but mixed US data has kept the US Dollar unappealing.
For now, investors are awaiting upcoming comments from Federal Reserve officials before making fresh moves on the US Dollar.
Pound to US Dollar (GBP/USD) Exchange Rate Awaits Political and Central Bank Developments
The Pound is tumbling today, but the British currency’s outlook could see a significant shift in this week depending on how the UK coronavirus situation unfolds.
UK medical officials will make comments on the state of the coronavirus pandemic in Britain later today. Speculation is rising that new national restrictions could be revealed in the coming sessions.
This means the Pound may have further to fall. In fact, if UK-EU Brexit relations continue to worsen, the Pound’s losses may only intensify.
As for the US Dollar, investors are eagerly awaiting comments from Federal Reserve officials expected over the coming sessions.
Officials including Brainard, Kaplan and Williams are expected to hold speeches today, ahead of a testimony from Fed Chairman Jerome Powell set to begin tomorrow.
The Pound to US Dollar (GBP/USD) exchange rate outlook will of course be influenced by any potential developments in coronavirus vaccine news as well.