Anticipation for Signs of Economic Recovery Leaves GBP/USD Trade Tense

The Pound to US Dollar exchange rate has seen little movement since markets opened this week. This morning’s UK data had little impact on the pair. Instead, Pound and US Dollar investors are awaiting domestic coronavirus developments before making big moves. 

Last Week: Sterling Rebounds despite Safe Haven Demand 

Last week saw investors return to the Pound. At the end of the quarter, investors bought it back from its lows in profit taking. A brief rise in hopes for Brexit progress to be made this month also helped. 

The US Dollar continued to see mixed movement in reaction to global shifts in coronavirus and risk sentiment. 

While coronavirus ‘second wave’ fears rose and boosted demand for safe havens like the US Dollar, impressive data from major economies kept economic rebound hopes high. This meant that safe haven demand was ultimately limited and GBP/USD was able to sustain a recovery. 

Three Things to Watch For This Week 

  1. Coronavirus Developments 

More of Britain’s economy is reopening from the coronavirus pandemic, and if the number of new cases surges it could cause fresh market anxiety. The number of US cases continues to surge, which may weigh on the US Dollar. 

  1. Brexit Developments 

More Brexit negotiations are expected to take place this week. Analysts are hoping for some solid developments this month, so the tone of talks could have a big influence on the Pound. 

  1. UK Summer Budget Statement 

UK Chancellor Rishi Sunak will hold a Summer Statement on Wednesday, something of a supplementary Budget. If there are any fiscal stimulus policies that impress markets this could bolster Pound support. 

GBP/USD Outlook 

Britain and US coronavirus outlooks both concern investors. These are likely to remain the focus, and mixed market risk-sentiment could limit the Pound to US Dollar exchange rate’s potential for big moves. 

Josh Jeffery

Contact Josh Jeffery