The Pound is moving southwards for a fourth straight session on Thursday. The Pound US Dollar exchange rate settled on Wednesday at -0.3% at US$1.2230.
At 06:30 UTC, GBP/USD is trading -0.3% at US$1.2196 a 5-week low as fears over the economic hit to the both the UK and the US economy return.
GBP: More Economic Pain To Come
Downbeat UK fundamentals including weak data, frustratingly slow changes to coronavirus statistics and Brexit are keeping the Pound heavy.
Whilst the English economy is very slowly starting to reopen concerns are lingering over the extent of the damage that the coronavirus lockdown is causing. Yesterday GDP data showed that the UK economy contracted -5.8% in March, which only included two weeks of lockdown. The worse is yet to come with the Bank of England forecast a -14% economic contraction this year.
The Bank of England Governor Andrew Bailey hinted that the central bank stood ready to ease monetary policy further if necessary, in an ITV interview.
Brexit headlines have been mixed as talks continue across the week. The latest report in the Guardian newspaper says that the government has conceded, in private, to goods checks in the Irish Sea.
There is no high impacting UK economic data. Investors will continue monitoring the gradual reopening of the UK economy and coronavirus statistics.
USD: 2.5 Million More US Jobs Lost?
A flight to safety is boosting the US Dollar. A dose of reality from Federal Reserve Chairman Jerome Powell dashed hopes of any quick economic recovery. Fed Powell warned of an extended period of weak economic growth. Adding to investors angst, the World Health Organisation’s top scientist said that coronavirus may never go away.
Investors will now look ahead to the release of US initial jobless claims. As release which has become one of the most closely followed macro data points since the coronavirus outbreak and lockdown, mid-March.
Analysts are expecting 2.5 million more Americans to have filed for unemployment benefits in the week ending 9th May. This would take the total number of Americans signing up for unemployment benefits to 36 million since 21st March, a quarter of the US working population. The numbers have been steadily declining from the record 6.1 million initial jobless recorded week ending 28th March. However, with so many Americans without jobs any recovery will be a very slow process.
