GBP/USD Exchange Rate As Safe-Haven Demand Slips As US Political Tensions Ease
The exchange rate of Pound to US Dollar (GBP/USD) has increased by 0.2 percent today, with the pairing actually trading about $1,336. The US Dollar (USD) suffered from the selling of safe haven assets today after President Donald Trump eventually conceded and paved the way for the transition to President-elect Joe Biden. As a result, financial markets responded favourably to the news, viewing it as a symbol of relative political peace in the United States after the heated 2020 elections.
Russ Mould, AJ Bell’s investment director, said that both the smooth transition of power and oil prices have boosted global markets’ optimism, saying:
‘An upbeat day for markets has been sparked by Donald Trump’s approval of the transition to Joe Biden by the US presidency, suggesting a smoother handover than anticipated. ‘
Pound (GBP) Edges Higher Inspite of growing Brexit concerns
The Pound rose this week due to positive news this week about the British Covid-19 vaccine from Oxford’s AstraZeneca. However, concerns about bribex have begun to overshadow hopes for the UK economy, with Governor Andrew Bailey of the Bank of England (BoE) saying that no deal could do more harm to the economy than Covid-19.
In the meantime, Chancellor Rishi Sunak also said that a deal was preferable but, despite that the United Kingdom would ‘prospere in any event.’ Any further downbeat comments on Britain’s economy for 2021 would however, prove GBP negative.
GBP/USD Outlook: Will Prospects for a UK-EU Trade Agreement Raise Sterling This Week?
US Dollar (USD) traders are looking forward to tomorrow’s US Durable Goods Order results for October. If this points to a major setback in the world’s largest economy, we might see a rise in demand for the ‘Greenback’ safe haven.
Again if this points to a high degree of unemployment, the US economy’s prospects will deteriorate, raising demand for safe-haven currencies. The GBP/USD exchange rate will continue to be driven by speculation on the brib and the Covid-19 situation in the United Kingdom.
However any hint of a potential post-Brexit trade deal with the EU will prove to be GBP-positive.