GBP/USD Exchange Rate Rangebound as US Economy is Ravaged by Covid-19 Pandemic
The Pound to US Dollar (GBP/USD) exchange rate held steady this morning after US Federal Reserve Chairman Jerome Powell said that the Fed is ‘not out of ammunition by a long shot’. The pairing is currently trading around $1.21.
Jerome Powell commented:
‘We’ve done what we can as we go. But I will say that we’re not out of ammunition by a long shot. No, there’s really no limit to what we can do with these lending programs that we have. So there’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to.’
As a result, the US Dollar (USD) suffered a wide sell-off as investors are increasingly favouring riskier-assets. Furthermore, risk sentiment continues to rise after Asian and European economies slowly reopen following the perceived peak of the coronavirus.
US Dollar (USD) Suffers From Uncertainty Over America’s Handling of Covid-19
The US Dollar (USD) has also suffered from rising uncertainty over America’s handling of the Covid-19 crisis. This follows two of US President Donald Trump’s top officials highlighting the administrations own scientists as being to blame for the nations’ world-leading coronavirus death toll.
However, combined with last week’s dire US economic data, the GBP/USD exchange rate could continue to rise as the United States is increasingly ravaged by the coronavirus pandemic.
Pound (GBP) Steady Despite Fears that 6-Million Works Could Lose their Jobs to Covid-19
The Pound (GBP) remained subdued today after it was reported that 6-million workers could lose their job in as little as six months.
Moreover, The Centre for Labour and Social Studies (Class) said that many works were anxious that the coronavirus recession could be worse than the 2008 financial crisis.
Frances O’Grady, the general secretary of the TUC, commented:
‘Life has become harder still in the Covid-19 crisis – especially for those on the frontline.’
‘Although the problems these workers face have existed for many years, the Covid-19 crisis has laid them bare for all to see. And it has intensified the injustice.’
As a result, Sterling traders are becoming increasingly concerned ahead of tomorrow’s release of March’s UK’s ILO Unemployment Rate. Moreover, many analysts have speculated that Britain’s unemployment could rise to its worst levels since the 1980s.
GBP/USD Forecast: Could Rising UK Unemployment Sink Sterling?
US Dollar (USD) investors will be awaiting tomorrow’s release of the US building and housing permits data for March. However, if American economic data continues to underperform, then we could see the ‘Greenback’ sink deeper.
Meanwhile, tomorrow will also see Fed Chair Jerome Powell testify before Congress. If he is notably downbeat in his assessment of the American economy, then we could see the US Dollar continue to fall.
US-China trade tensions will also remain in focus this week. However, if relations between the world’s two largest economies continue to deteriorate, we could see the ‘Greenback’ benefit from a return of safe-haven demand.
The GBP/USD exchange rate could begin to fall tomorrow if the UK’s unemployment data paints a bleaker-than-expected outlook for the British economy.