This morning the GBPUSD interbank exchange rate was trading between a high of 1.2485 and a low of 1.2431. The pound rallied against the dollar yesterday pushing above 1.25 for the first time in over 12 days.
Since Boris Johnson, the UK Prime Minister resumed work we have seen the value of the pound supported. In the UK we have over 160,000 cases of Covid-19, and the United States has pushed past the 1 million mark and the worst affected country. Globally there are over 3 million cases now reported. There are still hopes still that a vaccine will be available sooner rather than later with several companies having stated that they are working on a vaccine. If a vaccine is pushed through, it is unlikely to be until next year when it will become available and possibly longer until the population of the world is all vaccinated.
While the UK has possibly seen the worst of Covid-19, Boris Johnson reiterated the UK must continue to abide by lockdown measures to avoid an increase again. The 7th of May is the first potential date we might see signs of an easing of restrictions.
Weaker UK Data Sees GBPUSD Retreat to 1.24
Yesterday the Confederation of British Industry distributive trades survey came in at -55 against a forecast -40. This measures the well-being of the retail sector and is compiled from survey results of retail and wholesale companies. The weaker than expected figure did little to help the pound yesterday.
US Federal Reserve Bank Interest Rate Decision and GDP Data Could Impact GBPUSD Rate
Later this afternoon at 1:30pm UK time, US Gross Domestic Product for the first quarter of 2020 is released which is currently forecast to come in at -4% against a previous reading of 2.1%. US pending home sales for the month of March are also released and forecast at -10% against a previous reading of 2.4%. Lastly the US Federal Reserve’s Interest Rate decision by the US central bank is announced at 7pm UK time. While this expected to remain the same, any hint by the Federal Reserve Bank that there may be further stimulus measures could affect the value of the US dollar.
As the US is the worst affected country from the virus, the appeal of the safe haven currency might dwindle slightly as investor opt to spread their risk to other countries. President, Donald Trump has stated that he is going to investigate whether China was not forthcoming about the dangers of the virus and if they did enough to stop it spreading. This could put a further strain on the US-China relationship, and affect ongoing trade relationships and could see the GBPUSD forecast a weaker US dollar as a result.
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