The Pound to US Dollar (GBP/USD) exchange rate recovered today as US dollar weakness and strong global risk appetite allowed the Pound to gain against the ‘Greenback’.
At the time of writing, the pair is currently trending around $1.3504
Pound (GBP) Makes Limited Gains as Markets Digest Brexit Deal
The Pound (GBP) found limited gains against the US Dollar (USD) today as excitement over a Brexit trade deal quickly faded.
Sterling investors appear to be concerned by a lack of any reference to both the services and financial sectors, which make up the majority of UK GDP, with Boris Johnson admitting that the deal ‘does not go as far as we would have liked.’
Furthermore, Labour leader Sir Keir Starmer is facing a rebellion over his decision to back the EU trade deal on Wednesday.
Sir Keir Starmer will order his MPs to vote for the deal in the Commons, ensuring it should pass into law in time for the UK’s exit from EU rules.
Starmer was quoted saying:
‘It is not credible for Labour to be on the sidelines.’
In addition, concerns over new barriers to trade with the EU and the impact that this is likely to have on the UK economy looks set to dampen GBP demand going into the new year.
US Dollar (USD) Exchange Rates Weakened by Global Upbeat Market Mood
The US Dollar (USD) is trading lower against the Pound (GBP) today as the majority of its peers continue to bask in post-Christmas market cheer.
This comes mainly following relief that Donald Trump finally signed off on the $900bn US stimulus package for the coronavirus pandemic, which is hoped that the fiscal aid will speed up economic recovery, boosting market sentiment.
Trump had threatened to veto the stimulus bill earlier in December as he pushed for the package to include larger stimulus cheques to American citizens.
The global market mood has also been buoyed by recent votes overriding Trump’s veto of a defence funding bill, as well as the House of Representatives vote to extend direct stimulus payments to citizens from $600 to $2000.
GBP/USD Forecast: Coronavirus Concerns Put Pound Under Pressure
Looking ahead, the Pound to US Dollar (GBP/USD) exchange rate could lose its traction in the coming days as coronavirus continues to rapidly spread across the UK.
The threat of further infections and another national lockdown expected in the New Year could continue to put pressure on Sterling sentiment.
USD investors will be looking to upcoming data releases on US jobless claims, which could further dampen the appeal of the ‘Greenback’ with claims expected to remain eight hundred thousand.
The coronavirus pandemic will also remain in focus for USD investors as an increase in cases shows little sign of slowing down.
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