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Pound US Dollar Slumps to $1.37 as Coronavirus and China Concerns Weigh on Market Sentiment

Pound US Dollar

Pound US Dollar Exchange Rate Slumps in Risk-Off Trade 

The Pound US Dollar (GBP/USD) exchange rate is trading at a new one-month low this morning as a decidedly risk-off mood sees investors favour safe-haven currencies. 

At the time of writing the GBP/USD exchange rate is trading at around $1.3765, down roughly 0.7% from today’s opening rate. 

US Dollar (USD) Surges in Skittish Trade 

The US Dollar (USD) is catching bids this morning as skittish investors seek safe harbour as market sentiment is knocked by concerns over a third wave of coronavirus cases in Europe as well as new tensions between the West and China. 

In Europe, a resurgence in coronavirus cases, driven by the more viral variant which originated in the UK, has prompted Germany to extend its lockdown over the Easter period, with other Eurozone countries expected to follow Germany in the coming days. 

At the same time, markets have also been unsettled by a coordinated move by the US, the UK, Europe and Canada to impose sanctions on Beijing over human right abuses in Xinjiang

Ipek Ozkardeskaya, senior analyst at Swissquote, comments: 

‘Market sentiment is mixed on the back of rising Covid cases and escalating tensions between China and the West. The latter will further weigh on fragile US-China trade relations and add fuel to the global trade war.’ 

In addition, the US Dollar could find further support later this afternoon as Federal Reserve Chair Jerome Powell will begin a two-day testimony in front of Congress, with the ‘Greenback’ likely to rising in step with US Treasury yields if Powell remains reluctant to address concerns over rising yields. 

Pound (GBP) Buoyed by Surprise Dip in Unemployment 

While the Pound US Dollar Exchange rate may be on the defensive this morning, elsewhere we are seeing Sterling find more support, following the publication of the UK’s latest employment figures. 

According to data published by the Office for National Statistics (ONS), the UK’s unemployment rate fell from 5.1% to 5% in January, beating expectations unemployment would accelerate to 5.2%. in spite of a new national lockdown being imposed at this time. 

Accompanying the unemployment figures was the latest earnings data, which revealed wage growth accelerated from 4.7% to 4.8% in January. 

However, while January’s headline figures were impressive, a number of analysts warn the end of the UK’s furlough scheme will still bring a stark rise in unemployment later this year.