The Pound to US Dollar exchange rate pushed above the $1.37 mark today as coronavirus and US politics remain in focus.
At the time of writing the pair is currently trading around $1.3710.
Pound Gains as Vaccination Rollout Continues
The Pound made back its gains today despite disappointing UK unemployment rate data.
Sterling initially fell against the US Dollar today following the release of November’s UK unemployment rate, which rose from 4.9% to 5% – bettering forecasts of 5.1%.
ING were positive about the data, saying that:
‘The UK labour maker report did not provide any negative surprise this morning (November unemployment was modestly lower vs expectations, while weekly earnings turned higher), suggesting a day of calm for GBP today.’
The Pound was supported however as the UK vaccine rollout continues and NHS chief executive Sir Simon Stevens commented that it’s possible that coronavirus could become ‘much more treatable’ in the coming months.
Speaking to the Health and Social Care Committee earlier today, Sir Stevens said:
‘I think a lot of us in the health service are increasingly hopeful that the second half of the year and beyond we will also see more therapeutics and more treatments for coronavirus.’
‘There are a number of others (treatments) in the pipeline and I think it is possible that over the course of the next six to 18 months coronavirus also becomes a much more treatable disease with antivirals and other therapies.’
UK investors do remain cautious as lockdown measures are expected to be extended, with Prime Minister Boris Johnson leading a press conference at 5pm this afternoon.
US Dollar Struggles as Global Risk Sentiment Increases
The US Dollar fell today as global risk sentiment increased as vaccine rollouts are implemented across the world, as global economic recovery is eyed by investors.
Pushing the US Dollar down further is the size of the proposed fiscal stimulus to be announced by US President Joe Biden.
Joe Biden has proposed a $1.9 trillion Covid-19 stimulus package to help support the US economic recovery caused by the pandemic.
It’s expected that the approval of the stimulus could take weeks to pass as it faces opposition from Republicans, which could help limit USD losses.
GBP/USD Outlook: Further Lockdown Measures to Push Down Sterling?
Pound investors will keep an eye on any coronavirus developments in the coming days, with any announcement from the government that lockdown measures will last longer than expected proving negative for Sterling.
US Dollar traders will focus on their own coronavirus developments, but also any news on the proposed fiscal stimulus from the Biden administration.
US investors will also look towards the Federal Reserve’s policy decision on Wednesday, although the interest rate is expected to stay unchanged, it is likely to reiterate its commitment to its monetary stimulus and using all tools at its disposal to support the US economy, which would cause the US Dollar to weaken.