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Forex News Roundup For June 28th, 2020

Forex News Roundup: USD Continues to Gain Against GBP Amid Second Wave Fears

Currency Converter Calculator's Forex News Roundup aims to provide readers with a condensed roundup of the latest developments in the global currency exchange market over the past few days.

In this edition, the US Dollar (USD) has been fluctuating against various rival currencies, with both political and economic factors driving the price movements.

GBP/USD Rate Drops Below 1.25 Amid Second Wave Fears

The exchange rate between the Great British Pound (GBP) and the US Dollar fell below 1.25 earlier this week as investors responded to fears of a second wave of Covid-19 hitting the world.

Record high daily new cases in several US states also added to investors' fears and caused the GBP to depreciate against the Greenback, as traders and investors increased their US Dollar holdings.

We have seen the USD appreciate following negative Covid-19 or economic news countless times over the course of the ongoing pandemic. This happens because investors move towards safer assets, such as the US Dollar and Gold, in response to negative developments (and this extra demand for the USD pushes its value up.)

Last week, the GBP was dealt a minor blow against the Euro (EUR) and the Greenback after the Bank of England (BoE) opted to increases its quantitative easing (QE) program to help the economy cope with the crippling pandemic.

The move saw the BoE increase its bond buying program – it's way of pumping money into the economy – by £100 billion.

Brexit negotiations are another development that is of particular interest to GBP traders, in addition to UK business leaders and politicians, of course.

India-China Tensions Add to USD Support

Growing tensions between India and China, which reached boiling point earlier this month when the two sides had a series of border clashes, are providing additional support to the Greenback against both major and minor currencies.

Again, this is happening because investors are favoring less risky assets as they fear a larger conflict between the two economic superpowers would profoundly impact the global economy – and it could drag in other regional and world powers.

For now, at least, it seems the situation has somewhat settled, but another escalation could be around the corner. So, all FX investors and traders (not just those with positions involving the Chinese Yuan or the Indian Rupee) are closely monitoring the situation.

Political and economic tensions between China and the US are also being watched with a close eye, as escalations in the Sino-US trade war have been heavily impacting not only the Greenback but also the Australian Dollar (AUD) and the New Zealand Dollar.

A Quick Summary

  • The GBP/USD exchange rate dropped below 1.25 earlier this week as investors sold or scaled back their GBP holdings in response to fears of a second wave of coronavirus hitting the world and delaying the global economic recovery.
  • Furthermore, record high daily new cases in a slew of US states added to traders' fears, resulting in the GBP depreciating against the Greenback.
  • Throughout the pandemic, we have seen investors and traders move their capital to safer assets, such as the USD and Gold, whenever the pandemic worsens and whenever the US or global economy reports a fresh hit.
  • The Greenback also benefitted from growing tensions between the Indian and Chinese governments. Tensions between the two economic powers came to a head earlier in June after army clashes were reported along the India-China border, resulting in casualties.
  • The US-China trade war is another matter that is closely being watched, as related developments have been able to affect exchange rates involving several currencies.