The pound to US dollar exchange rate starts the week higher as it has been reported that UK Prime Minister Boris Johnson is back in Downing Street and will hold a cabinet meeting this morning. Rates for GBP vs USD have hit a high of 1.2454 this morning. Pressure is mounting on the government to detail what the exit strategy will look like in the weeks and months ahead so parts of the economy and businesses can start preparing for that time. Any guidance or lifting of measures in the weeks to come ahead of the 7th May date could see considerable market volatility for the pound vs dollar exchange rate. Those looking to buy or sell dollars would be wise to make contact and consider their options at this key time in the coronavirus timeline. The government will need to make a clear choice soon as to how much it is prepared to relax the lockdown measures.
US Unemployment Continues to Rise
Last week saw a further 4.42 million people file for unemployment benefits in the US which represents about 15% of the workforce. This Thursday sees another set of US initial and jobless claims although there is some expectation that the worst may now be over. Any deviation from this could result in considerable volatility for the GBP to USD pair. This Wednesday will see the next US Fed interest rate meeting and any guidance offered as to how it seeks to continue to manage monetary policy in response to Covid-19 could see further volatility for the dollar. New York Governor Cuomo has announced a phased plan to reopen NY city from 15th May. The number of confirmed cases in the US has nearly reached 1 million whilst globally the number has broken 3 million.
Lack of Brexit Developments Weighing on Sterling
Brexit meanwhile is making the headlines after the EU’s chief trade negotiator commented on Friday that progress in discussions had been disappointing and made it very clear that he felt Britain was holding things up and not addressing particular details that are important to the EU. There is pressure on the government to delay the transition period although for the time being the stance from government is that it will not delay beyond 2020. Brexit is likely to become one of the big drivers for sterling exchange rates in the months ahead as those trade discussions intensify.
If you’d like to discuss these factors and how they could impact an upcoming currency transfer, feel free to get in touch with me, James Lovick, using the form below.