Pound Sterling US Dollar (GBP/USD) Exchange Rate Slides as Traders Flock to Safety
The Pound Sterling US Dollar (GBP/USD) exchange rate slumped this morning, leaving the pairing trading at around $1.2470.
The US Dollar firmed against a handful of currencies on Monday as traders began to flock back to the safety of the ‘Greenback’.
Global growth fears dampened market sentiment and sent oil prices lower, hurting commodity currencies.
However, the relaxation of strict coronavirus containment measures from the New Zealand government offered some support.
Commenting on this, Ray Attrill, head of FX at National Australia Bank in Sydney stated:
‘The market wasn’t expecting quite such a short timeframe for the potential relaxation of restriction levels.
‘However the risk sentiment today is not quite as positive as it was. There is still a degree of safe haven support and a level of demand for US Dollar that is going to transcend whether or not we are in risk-on or risk-off mode.’
Added to this, Chris Weston, Pepperstone’s head of research noted:
‘We are coming into the eye of the storm. And as the market starts to focus less on virus headlines, or at least will be less sensitive to better news, we will focus more on the lasting effects on the economy and solvency.’
Sterling (GBP) Falls as the Coronavirus Pandemic Continues to Dominate Headlines
On Monday, the British Retail Consortium (BRC) revealed that the number of people leaving their homes to shop plummeted by 83%.
This followed last week’s data from the BRC which showed retail sales spending slumped by more than a quarter.
Today’s figures show that the decline is going to be even sharper and according to BRC chief executive, Helen Dickinson:
‘Footfall dropped in early March, as many people chose to stay at home and reduce the risk of catching coronavirus.
‘This downwards trajectory was accelerated by the government’s decision to put the UK on lockdown.’
Added to this, further data from Rightmove said it was unable to provide meaningful house price data due to the low levels of new houses being listed.
This left the Pound under pressure on Monday morning, as the coronavirus pandemic continued to dominate headlines.
Pound US Dollar Outlook: Weak UK Employment Statistics to Send GBP Lower
Looking ahead to this afternoon, the US Dollar (USD) may edge higher against the Pound (GBP) if traders continue to flock back to safety.
If the Chicago Fed National Activity Index slumps further than expected in March, cautious traders will head to the ‘Greenback’.
Meanwhile, the pairing could extend its losses on Tuesday following the release of UK employment statistics.
If March’s claimant count change increases more than expected in March, revealing further signs of coronavirus-related economic damage, it will send the Pound US Dollar (GBP/USD) exchange rate lower.