The Pound is extending gains versus the US Dollar for a second straight session, after falling across the first part of the week.
The Pound US Dollar exchange rate settled on Thursday +0.17% at US$1.2363, after picking up from a two-week low of US$1.2265.
At 07:15 UTC, GBP/USD is trading +0.3% at US$1.2400. This is at the upper end of the daily traded range, on improving US – China relations and as investors look ahead to US non-farm payroll figures. UK markets are closed for May Day and VE Day Anniversary public holiday.
UK Consumer Confidence Remains Close To Record Lows
The Pound is advancing across the board as investors await the government’s lockdown exit strategy. Whilst hopes are running high, ministers have been trying to play down expectations for any significant easing. Boris Johnson will make the announcement at 7PM UTC on Sunday.
Data has revealed that consumer confidence in Britain’s lockdown economy is still severely depressed. According to the GFK consumer confidence report morale ticked higher to -33 in the second half of April, up from -34, the record low level hit at the start of the month. Low morale means weak spending, which is bad news for the economy.
The data comes following Bank of England projections in the previous session, that the UK economy will contract -14% this year in its deepest recession for 300 years.
21.5 Million Job Losses
The US Dollar is trading on the back foot across the board on improved risk sentiment after US and Chinese trade negotiators held a conference call to discuss the implementation of the Phase One trade deal. They agreed there had been good progress, easing tensions between the two powers.
Investors will now turn their attention to the US labour Department’s jobs report, the closely watched non-farm payroll. Analysts are expecting the employment report to show that a record 21.5 million Americans jobs were lost in April, driving the unemployment rate to 16% from just 4.4%. This would be the highest rate of unemployment since 1939 as the coronavirus lock down has resulted in companies slashing jobs at unprecedented levels.
How the US Dollar responds to the report depends on whether the damage to the labour market is seen as short term, mainly in the restaurant and leisure sector, or longer term with job losses across all sectors.
