The US dollar has weakened so far this week against the pound as investors appear to be moving slowly away from the dollar’s safe haven status. The US Federal Reserve (Fed) are due to meet tomorrow evening to discuss their latest monetary policy decision. With the Central Bank having already announced a rescue package of $2.3tn as well as slashing interest rates to historic lows, there appears to be little more they might do in the short term to change policy as they need to monitor how the economy will perform in order to decide whether or not to make further interventions.
With the US leading the globe in terms of cases and deaths, markets will look forward to see how the US will attempt to end its lockdown status. Testing has been ramped up across the economy and Trump has suggested he may leave it up to each state to decide how to take responsibility for their control of the virus.
Tomorrow we also see the latest release of US Gross Domestic Product (GDP) for the first quarter. The prediction is for a contraction of 4.1%. Clearly this a huge a concern for the world’s leading economy but things are likely to get a lot worse in terms of GDP before they get better, as we are already one month into the start of the second quarter.
Oil prices have also fallen dramatically, and according to Goldman Sachs, global oil storage could hit its limit as soon as mid-May. This could cause huge volatility for oil prices and could turn have a big impact of the value of the US dollar.
UK PM Addresses the Nation After Returning to Office
Turning the focus back towards the UK, Boris Johnson was back in public, addressing the nation yesterday morning. He thanked the British people and encouraged them to continue their social distancing measures as well as warning of ‘maximum danger’ if the lockdown measures are relaxed too early.
Prior to tomorrow’s Fed decision I think we could see GBPUSD exchange rates challenge 1.25 during today’s trading session, so if you’re considering buying US dollars with pounds, keep a close eye out on today’s movement.
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