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Dollar Weak, Sterling Expected to Fall Further

In this edition, we take a look at why the Dollar remains under pressure and where Sterling's value is expected to go in the short and long term.

Political & Economic Uncertainty Hamper the USD

The Greenback got off to a poor start to the week and remains under pressure due to a combination of political and economic uncertainty, FX analysts have warned. 

On Sunday, the Dollar fell by almost 0.5 percent against its main currency rivals, and its short term outlooks looks bleak. 

In particular, the US government’s plans to approve a fiscal stimulus package in a bid to help revive the economy from its coronavirus-induced recession are dragging on the Dollar’s value.

Political uncertainty within the United States, in addition to strained relations with China, are also adding to investors’ concerns and pushing them to even safer assets, such as gold. 

The precious metal has appreciated by over one percent in recent days, and it’s in a good position to capitalize on the USD’s continued weakness. 

The Federal Reserve’s next move with regards to interest rates will impact both of these assets, so investors will be keeping a close watch on this to decide what to bet on. 

Sterling Expected to Fall Further

The Great British Pound (GBP) is likely to continue to fall in the short term but will recover before the end of the year, according to investment bank BNP Paribas. 

The bank expects the European Union (EU) and the UK to agree a “thin” post-Brexit trade deal – and this should cause Sterling to surge and recover its lost ground.

"We do not think that the latest developments mean that no deal is now inevitable," Paul Hollingsworth, Chief UK Economist at BNP Paribas, added.

The Pound is currently trading at around 1.29 against the US Dollar and 1.08 against the Euro (EUR) after depreciating against the pair of them in recent days. 

A Quick Summary

  • The US Dollar is continuing to fall against its main currency rivals due to persisting economic and political uncertainty. 
  • The agreement of an economic stimulus package to help the US economy get back on its feet after the COVID-19 pandemic will add further pricing pressure onto the USD, analysts have warned. 
  • Gold has benefitted from the Dollar’s recent downturn, with the precious metal strengthening by over 1 percent in a matter of days. 
  • Meanwhile, global investment bank BNP Paribas has said it expects the Sterling to continue to depreciate against the Euro and the US Dollar in the short term, before recovering in the coming months.
  • It explained that it thinks the Pound will recover because it believes a “thin” post-Brexit trade deal will be reached with the EU before the end of 2020. 

Currency Converter Calculator’s Forex News Roundups aim to help traders and enthusiasts stay up to date with the latest news and analysis in the global currency market, with a focus on the US Dollar (USD) and other major currencies.