GBP/USD Exchange Rate Falls Despite Rising US Job Openings in May
The Pound to US Dollar (GBP/USD) exchange rate dipped this morning, with the pairing currently trading around $1.252.
The US Dollar (USD) held steady against many of its competitors today on easing market optimism. With lingering fears over a possible second wave of the coronavirus hitting the world’s largest economy, investors are flocking back to the safe haven ‘Greenback’.
Yesterday saw the latest JOLT’s job figures for May, which revealed a larger-than-expected number of job openings. As a result, investors are becoming more optimistic that America’s economy could be on the road to recovery.
Analysts at Bloomberg commented on the report:
‘Employers, on net, are adding workers to payrolls, as evidenced by two straight record monthly increases in May and June… Yet with demand in many industries only gradually building, many workers continue to get caught up in the economic fallout of the pandemic and the recession it spurred.’
Meanwhile, the resurgence of Covid-19 cases in the United States and the return of some state lockdowns has dampened risk appetite today.
Additionally, comments from several Federal Reserve policymakers have caused concern. The Fed commented that the increasing number of coronavirus cases could have a negative impact on the nation’s economic growth.
Pound (GBP) Struggles as UK Markets Await Summer Statement
The Pound (GBP) struggled against the ‘Greenback’ today ahead of UK Chancellor Rishi Sunak’s Summer Statement.
Mr Sunak is likely to announce a temporary job creation scheme for under-25s, though investors will be paying close attention to other attempts to stimulate the British economy.
The Labour Party shadow chancellor, Anneliese Dodds, criticised Mr Sunak ahead of today’s statement, saying:
‘I say to the government, if it does increase taxes during the recovery, and cuts back on the public services we all rely on, this will damage demand and inhibit our recovery.’
‘Labour is not calling for tax rises – we are calling for growth.’
Meanwhile, the focus has remained on post-Brexit negotiations between the UK and the European Union today. With hopes rising over the EU taking a lighter stance on fisheries, we could see GBP edge higher on hopes of a breakthrough in negotiations.
Michel Barnier, the EU’s Chief Negotiator, also recently said that Brussels is now ‘ready to grant’ the City of London access to EU Markets. As a result, this has buoyed hopes that UK-EU talks could be progressing.
GBP/USD Outlook: Could a Brexit Breakthrough Boost Sterling This Week?
US Dollar (USD) investors will be awaiting tomorrow’s release of Jun’s US Initial Jobless Claims. If these continue to ease, we could see USD edge higher as America’s economy recovers.
However, the ‘Greenback’ will continue to be driven by risk sentiment this week. Any further signs of rising coronavirus cases in America could buoy safe-haven demand. As a result, we could see the USD/GBP exchange rate edge higher.
The GBP/USD exchange rate will be driven by post-Brexit negotiations between the UK and the EU this week. Any signs of a breakthrough on a possible free trade deal would buoy Sterling.