The Pound is rebounding versus the US Dollar on Thursday, snapping a four-session losing streak. The Pound US Dollar exchange rate settled on Wednesday -0.75% at US$1.2343 as risk sentiment soured following data showing 20.2 million Americans in the private sector lost their jobs.
At 07:45 UTC, GBP/USD is trading +0.3% higher at US$1.2382, at a session high following the Bank of England monetary policy announcement and as investors look ahead to the BoE Governor’s speech and US Initial jobless claims.
BoE Takes Stock
The Pound has jumped higher after the BoE voted 7 – 2 to keep monetary policy unchanged. The move comes after the central bank acted on several occasion over the past two months in response to the coronavirus crisis, slashing interest rates to 0.1%, a historic low and adding £200 billion to its bond buying programme.
In line with the Federal Reserve and ECB, the BoE are taking stock of where they are after significant action over the past eight weeks.
The BoE expects the UK to experience an economic contraction of -14% this year, higher unemployment, inflation below 1% and a tepid recovery. The projections were dire. However, they didn’t dampen the Pound which continues its advance.
Attention will now turn to Boris Johnson and his lockdown exit strategy expected to be announced this weekend.
3 Million Initial Jobless Claims Forecast
The US Dollar pushed higher in the previous session following the release of the ADP Private payroll data. The report revealed that 20.2 million private sector jobs had been lost in April amid the coronavirus crisis. This was the worst drop in the report’s history and double the job losses seen in February 2009 of the Financial crisis as the coronavirus lockdown brought the economy to a standstill.
Today investors will look towards the release of US initial jobless claims. An additional 3 million are expected to have signed up for employment benefit in the week of 1st May. This would take the total to 33 million in just 7 weeks as people are laid off from their jobs at a record pace. A weaker than forecast reading could boost the safe haven US Dollar higher
