Pound US Dollar Exchange Rate Continues to Tumble as GBP Gives Up Gains
Investors continued to sell the Pound US Dollar (GBP/USD) exchange rate on Friday morning, as concerns over Britain’s coronavirus vaccine rollout accelerate this week’s Pound (GBP) selloff. The US Dollar (USD) continues to rise despite a dovish tone from the Federal Reserve.
Since opening this week at the interbank level of 1.38, GBP/USD has seen mixed movement. GBP/USD briefly touched on a fortnight best of 1.39 but has since been slumping, losing over a cent throughout the week.
At the time of writing on Friday, GBP/USD is trending near lows of 1.36. This is also close to March’s worst levels, so without a recovery GBP/USD could be looking to lose most of 2021’s gains so far.
Next week’s economic calendar will see more key data including UK growth and US retail sales. Developments around Britain’s gradual economic reopening could also be influential.
Pound (GBP) Exchange Rates Continue Tumble as Vaccine Concerns Hit UK
Concerns about the AstraZeneca coronavirus vaccine, which have been dampening Euro (EUR) appeal for some time already, are hurting the Pound this week.
Sterling was already sold from its best levels in profit-taking, but the vaccine concerns have deepened the British currency’s selloff.
Concerns have been rising about Britain’s reliance on the AstraZeneca vaccine. Due to rare reports of blood clots, the UK has advised under-30s to not take the AstraZeneca vaccine.
Concerns that this could slow Britain’s vaccine rollout are keeping the Pound under pressure and making it easier for the US Dollar to gain against it.
US Dollar (USD) Exchange Rates Gain Despite Federal Reserve Dovishness
The US Dollar is climbing against the Pound this week, due largely to broad weakness in the Pound.
In fact, GBP/USD may have fallen even further if not for the US Dollar’s own weakness. Investors have been selling the US Dollar from its own highs this week as the Federal Reserve reiterates its dovish tone and risk-sentiment rises again.
In the middle of the week, the Fed meeting minutes continued to signal dovishness. Last night’s speech from Fed Chairman Jerome Powell also showed no signs of a hawkish shift, with a dovish tone persisting.
According to Kit Juckes, Head of FX Strategy at Societe Generale:
‘In short, the energy has gone out of the Dollar’s first-quarter rebound, just as it has gone out of the bond sell-off,’
Pound US Dollar (GBP/USD) Exchange Rate Awaits Key UK Data and Lockdown News
This week’s key data had little notable impact on the Pound or US Dollar, with both currencies being driven more by global sentiment.
However, the Pound’s selloff could slow soon as the shift in sentiment is digested. This could leave Sterling more vulnerable to key data and coronavirus pandemic developments next week.
Next week will see the publication of many key UK ecostats, including the nation’s latest growth rate report.
UK growth rate data from February will be published next Tuesday. It will be followed later in the day by US inflation rate data.
Stronger UK growth data could boost hopes for UK economic resilience. Meanwhile stronger than expected US inflation could cause Federal Reserve rate hike speculation to rise yet again.
Britain’s economy is expected to continue gradually reopening next week, with some shops and bars reopening. As a result, any complications in the coronavirus situation could also influence the Pound US Dollar (GBP/USD) exchange rate.