US Dollar Rises Against the Pound, Gold Rebounds

In this edition, we take a look at why the US Dollar (USD) has surged against the Great British Pound (GBP) recently and why Gold, which has a very strong first two quarters in 2020, has rebounded. 

Dollar Rises Against Sterling On Brexit Concerns

The Greenback has appreciated sharply against Sterling due to rising concerns that the UK could crash out of the European Union (EU) without a trade deal with the bloc in place. 

Specifically, the Pound dropped by over 1.5 percent against the US Dollar in a matter of hours, bring the GBP/USD exchange rate down to roughly $1.30.

Sterling also fell by a similar percentage to the Euro (EUR), with the GBP/EUR exchange rate going as low as EUR1.11 on Tuesday.

These significant falls came shortly after Sir Jonathan Jones, the head of the UK's Government Legal Department, quit his post amid apparent concerns over Prime Minister Boris Johnson's to override elements of the Brexit Withdrawal Agreement. 

Political commentators have warned that such a move could undermine the agreement Britain signed up to with the EU a year ago and risks other global partners considering the UK to be untrustworthy. 

Gold Rebounds After Stock Market Sell-Off

Gold rebounded from a two-week low earlier this week following a sell-off in US stock markets. This sell-off increased demand for the precious metal, which is considered a safe haven asset by investors all around the world, and thus pushed its price up.

Commenting on the rebound, Phillip Streible, chief market strategist at Blue Line Futures, said, "We saw a bounce off the lows in gold after a sharp drop in U.S. equities sparked some safe haven buying. People are confused, they don't know where the bottom is at in the equity markets right now."

Other market analysts noted that rising global COVID-19 cases are also responsible for the increased demand for gold, as the pandemic remains the biggest threat to the international economy and safe haven assets typically perform well in times of economic uncertainty and turmoil.

Where gold prices go from here is dependent on how the pandemic continues to unfold, particularly in the US and Western Europe, but other developments, such as Brexit talks and US-China tensions, will also impact the value of the precious metal and various major currency pairs. 

A Quick Summary

• Sterling had a bad start to week, with the increased threat of a no-deal Brexit causing it to depreciate sharply against the Greenback and the Euro.
• Specifically, the pound fell to 1.30 against the US Dollar and 1.11 against the Euro.
• Another big story this week is gold prices rebounding from their two-week low. 
• This was prompted by a major sell-off in the US stock markets, which increased demand for gold as it’s a safe haven asset which typically performs well in times of economic difficulty.
• Other factors, such as poor progress in Brexit talks and rising coronavirus cases, also contributed to the rise in gold prices.

Currency Converter Calculator's Forex News Roundup is a great way to stay up to date with the latest happenings in the global currency exchange market. Our roundups are suited to Forex traders and enthusiasts alike, and we cover a broad range of currencies, with a focus on the Greenback.