- Pound (GBP) is selling off as government bans gatherings of over 6 people
- No deal Brexit is looking increasingly more likely
- US Dollar (USD) rises on safe haven flows after US tech sell off
- Risk sentiment hit after AstraZeneca halts covid vaccine trial
The Pound US Dollar exchange rate is trending lower for the third straight day. The pair settled -1.3% lower at US$1.2987 on Tuesday. At 06:15 UTC, GBP/USD trades -0.1% at US$1.2970. The pair trades at a six week low having lost 2.3% so far this week.
Brexit concerns and fears over a second wave of coronavirus have seen the Pound tumble. The government announced emergency measures to attempt to control surging coronavirus numbers by banning all gatherings of more than 6 people in the UK. The drastic move comes as the number of new daily cases jumped to 2420 on Tuesday, with 8000 new cases in just 3 days. The rise in infections are prompting fears of a second wave. The government has also tightened lockdown restrictions in Bolton.
Brexit news also sent the Pound tumbling in the previous session as the prospects of a no deal Brexit become more real. The Government will set out the blueprint for life outside the EU, planning legislation which could break internal law in a limited way.
The safe haven US Dollar is holding firm in risk off trading. Risk sentiment is taking a hit after US technology stocks continue to dive lower. The tech selloff has caught the market by surprise. The US Nasdaq, the tech heavy index closed another 4% lower overnight. Investors fear that there could be broader implications.
Adding to the downbeat news, AstraZeneca has paused its vaccine trials following a suspected adverse reaction in a candidate in the UK. The AstraZeneca and Oxford university vaccine is a front runner in the race for a coronavirus vaccine. Whilst it is a standard procedure to halt trials if an unexplained reaction, it is still hitting sentiment. This is because a vaccine is the quickest and surest route to return to economic growth of pre-covid levels.