GBP/USD Exchange Rate Increases as US Jobless Claims Forecast to Soar
The Pound US Dollar (GBP/USD) exchange rate held onto its upwards momentum today, with the pairing currently trading around $1.189.
Yesterday saw the US Dollar (USD) tumble after the US Congress passed the $2 trillion stimulus package, which strengthened market sentiment and weighed on demand for the safe-haven ‘Greenback’.
Instead, US Dollar investors will be awaiting today’s release of the US initial jobless claims report for March.
Forecasts show a significant increase from 281 thousand to 1,000,000. This could considerably weaken the appeal of the ‘Greenback’ as its economy struggles with the coronavirus pandemic.
Constance Hunter, the president of the National Association for Business, was downbeat in his analysis, saying:
‘It’s going to be an astronomical increase. We don’t have any recorded history of anything like this.’
The US Dollar (USD) continues to suffer from a widespread sell-off of safe-haven assets as global markets show signs of recovery following the Fed’s enormous stimulus response, which has made the ‘Greenback’ more widely available. Instead, investors are seeking out riskier assets.
GBP/USD Exchange Rate Rises as UK Markets Brace for BoE Rate Decision
The Pound (GBP) edged higher today as investors expect the Bank of England (BoE) to hold its all-time record low interest rate while forwarding further stimulus measures to bolster the British economy.
Analysts at Reuters commented:
‘The Bank of England is expected to say … that it is ready to take further radical action to prop up the economy and [Chancellor of the Exchequer Rishi Sunak] will announce help for self-employed workers hit by the coronavirus shutdown.’
However, as Sterling continues to remain vulnerable global economic developments amid the coronavirus pandemic, we could see the GBP/USD’s gains being short-lived as widescale economic volatility is expected to ensue as nation’s continue their lockdown.
Today also saw the UK’s retail sales report for February, which showed a substantial weakening even before the coronavirus took hold of the British economy. Retail sales slumped by 0.5% on a monthly basis.
Thomas Pugh, an economist at consultancy Capital Economics, warned:
‘People should brace for an eye-watering fall in retail sales in the region of 30% month-on-month in April.’
GBP/USD Outlook: Could Further UK Stimulus Measures Boost the Pound?
Us Dollar (USD) investors will be awaiting tomorrow’s release of March’s US consumer sentiment gauge. AS this is expected to deteriorate markedly due to the Covid-19 pandemic we will likely see the ‘Greenback’ continue to fall.
Sterling will remain sensitive to global economic developments into the weekend.
However, if Chancellor Rishi Sunak announces any further stimulus measures – or further support for the self-employed – we could see the GBP/USD exchange rate hold onto some of its gains as the UK economic outlook modestly brightens.