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Highlights
- GBP advanced sharply against the USD on Monday
- The domestic currency also gained against the euro
- The US dollar index dropped nearly 0.40% during the day
The Great Britain pound (GBP) advanced sharply against the United States dollar (USD) on Monday, 4 October, after the greenback lost momentum ahead of US jobs data as investors remained skeptical about the employment landscape in the country following the widespread concerns of Covid-19 and persisting business hurdles.
The domestic currency also gained against the euro, but the rise has been marginal as compared to the gains recognised by the GBP vs USD pair.
As per the latest forex data available, the GBP vs USD was trading at 1.3625, up 0.59% from the previous close of 1.3545 at the interbank foreign exchange market dealings on Monday. During the day, the currency pair oscillated between the range of 1.3533 and 1.3641, respectively.
GBP vs USD
Source: EODHD/Others
Image Description: GBP vs USD chart as on 4 October 2021
The US dollar index which tracks USD’s strength against a basket of six currencies dropped nearly 0.40% during the day. At the moment, the index was trading 0.29% lower at 93.773 from the previous close of 94.047. The dollar index fell significantly from the opening high of 93.963.
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With the looming worries around the prospective tapering measures by the US Federal Reserve with regard to its bond buying programme, the market participants have turned more cautious about the upcoming macroeconomic developments as they will considerably affect the strength of USD and help in gauging the near-term outlook for the currency.
Meanwhile, the GBP vs EUR pair gained slightly on Monday as the investors awaited the outcome of the Eurogroup meeting and the ministerial meeting of OPEC along with its allies. The GBP vs EUR currency pair jumped 0.16% to 1.1698 from the previous close of 1.1679 after starting flat. In the currency market session so far, the GBP vs EUR pair shuttled between a high and low of 1.1722 and 1.1665, respectively.
Pound sterling has already suffered substantial losses against the US dollar, as well as the euro in the terminal sessions of the July-September quarter. The domestic businesses are now resurrecting themselves with the help from the government of the UK to withstand the umpteen spending in the holiday season.
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Local improvement including the supply chain systems, adequate quantity of petrol at the refuelling stations, sufficient stock with the retailers and ample workforce at the hospitality avenues can collectively help the economy revitalise at a faster rate, effectively supporting the sterling. The amelioration in the volumes and quantum of cross-border deals, especially the export from the UK to Euro area and other volume-heavy jurisdictions across the world will certainly help the currency to get back to multi-year high levels in the near future.
The Bank of England has fixed a reference exchange rate of 1.3540 USD and 1.1676 EUR against a unit of pound sterling on 1 October. The currency conversion rate fixed for greenback is nearly 5% lower as compared to the 52-week high rate ascertained by the BoE.
