The Sterling to U.S. dollar exchange rate is climbing on US Dollar losses today. Despite Friday’s news that US President Donald Trump had contracted the coronavirus Covid19, market demand for safe havens is already falling.
For much of last week, low safe haven appetite made it easier for GBP/USD to advance. The pair climbed from 1.2741 to 1.2933 throughout the week, almost two cents.
This week so far, GBP/USD has only continued to climb. At the time of writing, GBP/USD is trending near a high of 1.2987. This is the best level for GBP/USD since it touched the level of 1.30 half a month ago.
A lack of strong supportive news for the UK outlook is limiting the Pound’s gains. Meanwhile, the US dollar outlook will remain focused on the health of U.S. President Donald Trump and the U.S. President Election.
Investors become more willing to take risks again after U.S. President Donald Trump was discharged from the hospital.
Despite mysteries concerning the time and severity of his Covid19 illness, President Trump returned to the White house yesterday. It was perceived as a signal that all was well, and market panic calmed as a result.
While uncertainties persist, investors took the opportunity to sell safe haven currencies like the US Dollar again, in favour of riskier assets.
Safe haven demand is also weaker amidst hopes for US fiscal stimulus. According to LEE Hardman, Currency analyst at MUFG:
“The increasing possibility of a “blue wave” (Democrat control of the White House and Congress) that would open the door for much-needed fiscal stimulus would be a welcome development for risk assets and could undermine the US Dollar”
In the daily charts of GBP/USD, the pair gained Wednesday morning in Asia Session.
The GBP/USD pair inched up 0.04% to 1.2883, with even optimism over the U.K.’s informal divorce talks with the European Union(EU) falling to shield the pound from the dollar’s gains.
As we can see in the support and resistance levels, the pair is still bouncing inside this area. With the Brexit woes and U.S. Presidential Elections coming up, there are a lot of uncertainties for placing positions ahead of the events.
The gains of the pair may be short-lived with the volatility the U.S. dollar is having of late due to Trump’s illness and cancellation of stimulus talks. Further confirmation if the pair will once again touch or break past the support level will be assessed by the following days and weeks.
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