London RationalFX

RationalFX : Dollar higher as safe-haven flow returns

RationalFX : Sterling rebounded on Thursday after recent lows but gains were limited as worries over a second wave of Covid-19 and negotiations over a Brexit deal weighed on the pound …

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A lack of Brexit progress continues to limit any significant sterling upside, but with European equities steadying after earlier falls and some calm returning to markets, sterling was able to claw its way upwards.

Sterling rallied versus a broadly weaker Euro, which was trading softer due to riskier assets in the region weakening and the European Central Bank disputing Germany’s court challenge to its money-printing plans.

Boris Johnson’s plan to ease restrictions further has led to health experts speculating that it could cause a second wave of Covid-19 which is a big risk to the the UK economy and the pound.


The dollar rallied on Thursday as safe-haven flow returned to the greenback owed to growing fears over a rapid rise in coronavirus infections. Furthermore, worsening trade tensions between the US and the European Union also contributed to safe-haven demand and a stronger USD.

Over 36,000 new coronavirus cases were recorded on Wednesday which has made investors more pessimistic about the chances of a quick economic recovery. With the number of cases rising by the day and trade tensions still on the table, this has led to an increase in demand for the safe-haven dollar.

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