The Pound versus US Dollar exchange rate is edging cautiously higher in early trade on Thursday after closing 0.3% lower at US$1.2378 on Wednesday as evidence mounted of a global recession.
Today at 07:30 UTC, GBP/USD is trading 0+0.1% at US$1.2390 as the focus remains firmly on coronavirus and its economic impact.
Pound Rises On Signs Social Distancing Is Working
The Pound traded broadly mixed in the previous session as data showed that the number of people signing up for the UK’s principal benefit, universal credit soared. 1 million people, 10 times the usual rate sign up giving an indication in the surge in the level of unemployment that is coming.
The data came as the UK experienced its deadliest day with 561 coronavirus deaths, bringing the total to 2352. However, amidst all the bad news, there was a glimmer of hope that the lock down measures are working. A study found that now one person with coronavirus is infecting 0.62 others. Prior to the lock down measures this was 2.6. The quicker the UK can bring coronavirus numbers down, the quicker the economy can fire up again.
Today there is no high impacting UK economic data. Investors will continue to monitor the coronavirus crisis and whether the UK is finally upping its testing plan.
3.5 Million Initial Jobless Claims Forecast
The Dollar pushed higher in the previous session amid mounting evidence that the coronavirus pandemic was sending the global economy into a deep recession. Manufacturing activity across the globe tumbled as factories closed and demand evaporated.
In the US manufacturing activity fell at the fastest pace since August 2009. The reading from the manufacturing purchasing managers index was 48.5 in March, down from 50.7. The pmi was actually slightly ahead of expectations of 45, this could be due to some producers being busier than usual due to stock piling. However, the overall picture was grim.
Today investors will continue focusing on data and the economic impact that coronavirus is having. US initial jobless claims data will be under the spotlight. Another record number of people signing up for unemployment benefits is expected after last week’s 3.3 million. Analysts are forecasting 3.5 million, as the astonishing collapse of the US labour market continues.
A high number of claimants would usually weigh on the US Dollar. However, in these unusual times there is a good chance that they will boost risk aversion and flows into the safe haven Dollar
