The US economy was plunged into potential further crisis yesterday, as President Donald Trump took to Twitter to declare that a second stimulus package for the American people will be postponed until after the election on November 3rd. In a 4-tweet statement, he told his representatives to halt negotiations. Friction has come from the size of the package which was being put forward. Trump went on the attack by claiming the significant bailout is for poorly run Democrat states and the stimulus was not linked to helping with the fallout from Covid. This sent GBP/USD tumbling, as traders looked to secure safe haven assets, such as the US dollar, even though the President was willing to sign off part of the deal. Federal Reserve chair, Jerome Powell, warned that if a package is not passed and given the green light, the US economy could head into a downward spiral.
There have also been more reported positive cases of coronavirus within the White House and the President’s close circle, as Trump recovers from the virus himself. Building on what is already a volatile period heading into the election, prices could see these short and sharp turns as more news headlines hit screens. Despite this, the dollar has opened softer this morning, and GBP/USD now sits above the 1.2920 handle, at the time of writing.
This evening at 19:00 BST, investors will be digesting the minutes from the Federal Open Market Committee meeting in September. Markets will be looking for positive signs from the economy, as the Fed moves to an average inflation target.
Have a great day.
Author: Jack Nicholls, Relationship Manager
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