Biden planning for an additional USD 3 trillion recovery package
Since Joe Biden won the US election last year, he made it clear that his priority was to provide strong financial support to the American people amid COVID-19, with particular focus on alleviating the US unemployment crisis.
During President Biden’s inauguration he revealed plans of a USD 1.9 trillion coronavirus stimulus package, which would provide stimulus cheques to most US citizens. The bill was passed by the House of Representatives two weeks ago and now there are reports that Biden has plans for another stimulus package.
Whilst the original stimulus plan aimed at helping struggling businesses and vulnerable individuals, the new package aims to help the environment, education and workforce development.
The Biden Administration is set to release full details of the proposed package this week to congressional leaders. Monday saw the President meet with national climate adviser, Gina McCarthy, to discuss how the US will combat climate change.
Seth Hanlon, a senior fellow at the liberal Center for American Progress think tank, stated “President Biden’s plan represents a stunning shift in priorities, addressing many of the nation’s most pressing challenges.”
After a difficult start to 2021, the US dollar (USD) has edged higher against many of its currency competitors over recent weeks, largely down to stimulus measures and recent comments from the Fed that the US economy would recover more quickly than expected. The British pound to US dollar (GBP/USD) exchange rate is 0.33% lower at USD 1.3705 heading into the North American session. At the same time, the euro to US dollar (EUR/USD) exchange rate is trading 0.2% lower at USD 1.181.
Trump still claims US election was rigged
The 2020 US election was full of drama and, even many months later, Donald Trump still claims that the election was rigged despite no evidence to confirm if this was the case. He reiterated these unproven claims in a statement last Saturday, adding that it ‘was a disgrace’.
It was widely expected that there would be a ‘Blue Wave’ outcome for the US election back in November but this failed to materialise after voting became much closer than polls had anticipated.
As it became increasingly apparent that there would be delays over the posting of results in battleground states, global equity markets slumped during the European session.
While most indices made a tentative recovery heading into New York trading hours, with caution setting in and uncertainty set to continue, further declines were anticipated.
The British pound to US dollar (GBP/USD) exchange rate was heavily impacted by US election developments, as drawn-out results weighed heavy on the currency pair.
At the time, the British pound (GBP) also had to navigate fears over the impact of the second UK lockdown and the impact this would have on the UK economy, which dampened sentiment in the UK currency.
Sterling traders brace FOR reopening of UK economy
Pound Sterling (GBP) exchange rates have struggled to put up much resistance against the US dollar (USD) and other major currencies despite the UK’s impressive vaccination campaign.
The UK has been in its third lockdown since January 2021, with thousands of businesses forced to close. With UK coronavirus cases on the decline, it seems that Prime Minister Boris Johnson’s roadmap out of lockdown is set to go ahead as scheduled.
The first stage of the roadmap took place during the beginning of March which saw the reopening of schools and stage two is set to take place in just under a week where six people or two households can meet outdoors.
Investors feared that a third national lockdown would cause further economic damage to the UK economy and pave the way for a double-dip recession, which would have limited the British pound’s (GBP) potential to gain in FX markets.
Whilst Pound Sterling (GBP) navigated fears over the impact of lockdown and the implications this would have on the UK economy, Sterling managed to become one of the best-performing currencies during the start of 2021 as the UK rapidly administered coronavirus vaccines at a much faster pace than the EU.
With positive comments from both the Bank of England (BoE) and Chancellor Rishi Sunak that the UK will make a strong economic recovery, it’s expected that the British pound (GBP) will recover its recent losses against the US dollar (USD) and the euro (EUR) when non-essential businesses reopen on 12th April. The Bank of England has previously referred to the UK economy as a coiled-up spring waiting to be released, with many people across the UK keen to get out and spend money once again.