• UK jobless claims jump by record 856,500 in April
  • Unemployment rate unexpectedly slips to 3.9% in 3 months to March
  • US Dollar drops on vaccine inspired risk rally
  • At 07:30 UTC, GBP/USD +0.5% at US$1.2250 > Real time exchange rates

The Pound is extending gains on Tuesday. The Pound settled on Monday +0.9% higher versus the US Dollar at US$1.2193 after risk sentiment smashed the greenback lower.

At 07:30 UTC, GBP/USD is trading +0.5% pushing through US$1.22 to US$1.2250 after UK employment data and as investors look ahead to a testimony by Federal Reserve Chain Jerome Powell.

UK jobless claims surged by 865,500 in April, to 2.1 million. This was significantly higher than the 150,000 that analysts had been expecting, as the coronavirus lockdown paralysed the economy causing job losses. The numbers are still significantly lower than the US and this is mainly thanks to the UK government’s job retention scheme.

The UK unemployment rate unexpectedly ticked -0.1% lower to 3.9%, down from 4% in the three months to March. However, this period only included just over 1 week of lock down. The unemployment figure is expected to push much higher in the coming months, with the Bank of England warning that unemployment could hit 10%.

The US Dollar traded sharply lower across the board on Monday as risk sentiment soared. Vaccine hopes and an optimistic Powell hit demand for the safe haven greenback.

Moderna Inc a US biotech company reported encouraging results in an early stage coronavirus vaccination trial. The next and final stages of the testing could be done by July. This has been enough to send market sentiment surging amid the uncomfortable reality that things may not ever return to normal unless there is a vaccine.

Federal Reserve Chair Jeremy Powell saying that a an economic recovery could take until the end of 2021. He also said that the central bank still had plenty of ammunition to help the markets and the economy. These comments boosted optimism and dragged on the US dollar.

Today investors will look ahead to a testimony by Federal Chairman Jerome Powell. The Fed released his testimony earlier than scheduled. He will focus on what the Fed has done so far to support the market and confirm that these tools will go back in the box once financial conditions improve.