GBP/USD: Dollar Strengthens As Investors Look To G20

The British pound is marginally higher against the US dollar on Monday.

The pound-dollar exchange rate was seeing some light relief from heavily selling on Friday that saw it tank from a peak just under 1.25 towards 1.22.

Vice President Pence describing the impact of the coronavirus in the United States as having “glimmers of progress” helped Wall Street open higher but saw a more mixed reaction in the dollar, which was caught between the good domestic news and its status as a haven asset.

GBP/USD was up by 31 pips (+0.27%) to 1.2292 with a daily range of 1.2210 to 1.2327 as of 4pm GMT.

The currency pair had initially sold off to test Friday’s low but rallied as the day went on, briefly popping above 1.23 before pulling back. Last week the exchange rate reversed weekly gains with severe losses on Friday to finish the week lower by -1.57%.

British pound steadies after Boris Johnson hospitalised

Sterling traders brushed off an initial kneejerk reaction to send the pound lower, buying the dip on Monday on the basis that Prime Minister Boris is still in good health and able to run the country despite his hospitalisation for coronavirus symptoms.

The currency might find itself under pressure again if the stay at hospital extends for a few days since it is not altogether clear who takes charge in Boris Johnson’s absence.

Dollar takes a pause, digesting jobs numbers

The US dollar closed mostly higher last week, getting a final boost on Friday when a huge jump in American unemployment saw investors seek the safety of cash in US dollars. Over 700,000 Americans lost their job in by far the worst month for the US labour market in over 100 months.

The Greenback has been staging a steady recovery from one of its worst weeks on record (week before last) caused by several interventions from the Federal Reserve.

Most expect the situation in the USA to get considerably worse before it gets better but New York State seeing its first daily drop in coronavirus case numbers offered a little hope that it was not far from a high watermark.