Coronavirus fears strengthen the US dollar

  • Coronavirus fears strengthen the US dollar 

     

    The US dollar has found itself back in vogue in recent weeks as second wave fears have seen investors favour the safe-haven currency.

    During this time, we’ve seen GBP/EUR drift up to 1.10, whilst EUR/GBP has drifted lower towards 0.89.

    Meanwhile, GBP/USD has slipped from 1.31 to 1.29, at the same time that EUR/USD has fallen from $1.18 to $1.16.

    Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…

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    What’s been happening?

    The US dollar struck higher through the second half of October, striking a new three-month high. The appeal of the safe-haven currency was bolstered amidst fresh concern over the coronavirus, with investors fearing the global economic recovery would be derailed as countries began to lockdown once more.

    The euro, meanwhile, faced a clear selling bias over the past couple of weeks due to spiking coronavirus cases across Europe. This stoked concerns that the Eurozone faces a double-dip recession, particularly after France and Germany announced new lockdown measures.

    At the same time, the pound traded erratically through the second half of October, with Brexit drama and a UK lockdown infusing Sterling with fresh volatility.

    What do you need to look out for?

    Looking ahead, it seems safe to assume that coronavirus concerns will continue to dominate market sentiment, particularly as additional lockdowns are announced.

    This is likely to put most pressure on the euro, while further bolstering the appeal of the US dollar, with the ‘Greenback’ also likely to benefit in the event of a contested US election result.

    Meanwhile, GBP investors will remain focused on Brexit, with the pound poised to rally if the UK and EU can finalise a trade deal.

     

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