GBP/USD: US elections, coronavirus and two rate decisions promise an explosive week

GBP/USD has succumbed to coronavirus concerns and elections uncertainty. Rate decisions by both central banks and the US Nonfarm Payrolls mean there will be no moment to rest in the election week in the US, Yohay Elam, an Analyst at FXStreet, reports. 

Key quotes

“Covid statistics are set to have a greater influence on sterling as a continued increase could tip the scales in favor of such a move. A second full shuttering is far from being priced in and could weigh heavily on the pound.”

“If France gives ground on fisheries and a magic formula including ‘creative ambiguity’ is found on state aid, sterling could shine. Brexit talks continue and are set to move markets.” 

“The main event on the calendar is the Bank of England's ‘Super Thursday’ rate decision. Will BoE Governor Andrew Bailey pull the trigger and set sub-zero borrowing rates? That would send the pound tumbling down and not priced by markets.”

“Trump or Biden: Llong months of campaigning and speculation are finally culminating in Election Day, but an instant outcome is not guaranteed. For markets, the worst outcome would be an inconclusive election, where both sides claim victory. Such a stalemate could boost the safe-haven dollar.” 

“While the elections dominate the airwaves, the first of November also features top-tier events – the Federal Reserve's decision and Non-Monthly Payrolls for October. Upbeat employment figures could boost the dollar, especially if it falls in case of a clear outcome in the elections. Three days should be sufficient to know who won.”

“The Fed is set to leave its policy unchanged nor indicate any move in December when new forecasts are due. Jerome Powell, Chairman of the Federal Reserve, clarified that the bank is ‘not thinking about raising rates’ anytime soon. Additional bond-buying will likely wait as well, given the recent upbeat economic data. Markets could fall if Powell expresses concerns over the virus's impact or sounds desperate in calling lawmakers to act. However, fiscal stimulus will likely wait for the new Congress in January.”