The Pound to US Dollar (GBP/USD) exchange rate pushed higher today as employment data from the US helped to bolster Sterling.
At the time of writing the pair are currently trading at around $1.3961.
Pound (GBP) Supported by UK Budget
The Pound found support today following on from the announcement of the UK’s Spring Budget yesterday afternoon.
As expected, Chancellor Rishi Sunak extended support for those affected by the coronavirus pandemic, though the rise in corporation tax was sharper than reported. However, 30% of businesses will not be affected by the rise.
Addressing MPs yesterday, Sunak said:
‘The amount we’ve borrowed is only comparable with the amount we borrowed during the two world wars. It is going to be the work of many governments, over many decades, to pay it back.’
‘Over the long term we cannot allow our debt to keep on rising it would be irresponsible to allow our future borrowing and debt to go unchecked. Once we are on the way to recovery, we will need to begin fixing the public finances.’
US Dollar (USD) Slips on US Jobless Claims
The US Dollar slipped this afternoon as US Jobless claims once again head higher to 745,000.
The increase in claims comes after last week’s claims were at their lowest level in three months. The increase has been attributed to the state of Texas and much of the central US being hit by severe winter storms.
Mark Hamrick, senior economic analyst at Bankrate, commented on the figures, saying:
‘For now, the pain of joblessness drags on. One year after the pandemic began, some 10 million Americans remain without work and a further 7 million have abandoned their search for work.’
‘This suggests it will take some time to re-employ all of these millions of Americans either unemployed or underemployed or have exited the workforce.’
The fresh increase has only added support to President Joe Biden’s proposed stimulus package.
It comes as Biden and Democratic leaders have reached an agreement that would limit eligibility for the proposed $1,400 stimulus cheques ahead of a Senate vote on the legislation.
US Dollar investors are also awaiting on comments from U.S. Federal Reserve Chairman Jerome Powell this evening, with Powell expected to address the recent surge in US Treasury bond yields which has seen the US Dollar rise.
Pound to US Dollar Outlook: Coronavirus Developments in Focus
In absence of any notable data from the UK before the weekend the Pound movement will be dictated by further coronavirus developments and data.
As the UK prepares to enter the first phase of reopening on Monday, many investors will be keeping an eye on whether everything goes as well as first planned.
US Dollar investors will be focused on tomorrow’s Non-Farm Payrolls data release, which is forecast to come in at 170,000, an increase of 120,000 the previous month which if hits forecasts could see USD head higher.