The future seemed promising for the pound yesterday as we saw some positive gains in the pound to US dollar exchange rate.
All hopes could be short-lived, however, following significant royal news from yesterday afternoon.
Prince Charles has tested positive for coronavirus.
We reveal the facts surrounding Prince Charles’ coronavirus diagnosis and how this could impact the pound to US dollar rate.
Prince Charles tests positive for coronavirus
Prince Charles set headlines ablaze yesterday as news broke regarding his coronavirus diagnosis.
The future King of England began to show mild symptoms last weekend and was tested for the virus the following Monday. Results received Tuesday evening came back as positive. In like manner, the Duchess of Cornwall took a test on Monday, but her results came back negative.
Despite testing positive, a palace spokesperson confirmed that Prince Charles remains in good health. At 71, the Prince is a high-risk case and is currently self-isolating at Balmoral.
As Prince Charles’ coronavirus news became apparent, the nation’s concerns immediately turned to the Queen. Prince Charles last saw the Queen on 12th March for an Australian bushfire relief event.
A source from the palace revealed that the Queen was in good spirits despite the brief contact with her son two weeks ago. The Queen is said to be following the relevant instructions from her advisers concerning her health. Being 93 years of age, the Queen is also a high-risk case and will remain isolated at her Berkshire residence.
It’s uncertain exactly how Prince Charles contracted coronavirus. The Prince has attended several royal engagements over the past few weeks.
Prime Minister, Boris Johnson, is aware of Prince Charles’ situation and wishes him a speedy recovery.
Update on the volatility of the pound
The pound seems to be in a constant state of vulnerability, continually battling with significant world issues. Volatility in the pound has been a recurring theme even pre-coronavirus due to the uncertainty with Brexit.
Surprisingly, Boris Johnson’s UK lockdown announcement on Monday appeared to have little effect on the pound.
However, the news of Prince Charles and the coronavirus certainly has not helped matters. Just as the pound appeared to make some progress, the Prince’s story knocked any advances.
Effects of Prince Charles’ news on the GBP/USD market
It’s been a journey of ups and downs for both GBP and USD the past few weeks. USD seems to be losing its stability and safe-haven status. The uncertainty is causing a fluctuation in the GBP to USD exchange rate.
GBP was on the up yesterday morning, following news of the US USD 2 trillion coronavirus stimulus deal. The stimulus plan news caused positive effects across currency markets, and there appeared to be a glimmer of hope on the horizon. The passing of the bill created a 0.66% gain for the GBP/USD, trading at 1.1834. The rise was the highest GBP to USD had become for some time.
Since news of Prince Charles testing positive for coronavirus, the pound has fluctuated against the US dollar. As the news broke, GBP to USD dropped 300 pips at midday but then recovered half the losses as the afternoon continued, rising back above 1.18.
GBP/USD currently stands at 1.19, and it is unclear how the pairing will remain over the coming days. The fluctuation proves that this is a time of uncertainty for currency markets.
With the US currently on lockdown, this has created a detrimental effect in terms of a US/UK trade deal. US President Trump is said to review the US’ lockdown situation soon and is keen for businesses to reopen.
The sooner this comes into force, the quicker the UK will be able to secure a trade deal with the US. A trade deal could place the UK in a better position economically, directly impacting currency markets.
What effect has this had on investors?
Both the UK and US are in shaky positions economically, leading to a lack of confidence with investors. Each country is awaiting essential information which will have a direct impact on the currency markets.
GBP investors are expecting further fiscal stimulus measures, which is due to be revealed soon by the UK Treasury. The Chancellor of the Exchequer, Rishi Sunak, is expected to increase the support available to self-employed workers.
Meanwhile, US dollar investors are awaiting US job data due this afternoon. The data is due to unveil unemployment figures as a direct result of the coronavirus pandemic. The statistics will undoubtedly impact stocks.
We will soon see how markets react to this data upon its release and its effect on the GBP to USD forecast. Will this have a lasting impact on currency markets or will it be just another transitionary blip?