- Pound (GBP) is supported by Chancellor Rishi Sunak’s spending plans in the Summer Statement
- Brexit messages over Brexit keep investors guessing
- Safe have demand eases dragging on the US Dollar (USD) amid increased hope of economic recovery
- US jobless claims in focus
The Pound US Dollar exchange rate settled +0.5% at US$1.2611 on Wednesday. The pair is extending gains for a fifth straight session on Thursday.
At 06:15 UTC, GBP/USD trades +0.1% at US$1.2630, marginally off the three-week high of US$1.2637 reached earlier in the session.
British Chancellor Rishi Sunak’s £30 billion spending plan to help guide the UK economy out of its deepest recession for 3 centuries is supporting the Pound.
Rishi Sunak aims to lift the coronavirus battered economy through measures such as tax cuts on house buying, targeted VAT cuts in leisure and hospitality business and through a retention bonus scheme for employers which re-hire employees, among other measures.
Strong fiscal stimulus combined with the Bank of England’s monetary stimulus should help limit the impact of the coronavirus crisis on the UK economy.
Brexit headlines were mixed on reports of “multi-annual” Brexit deals for some fishing rights, boosting optimism that a deal will be agreed. Even so, Germany’s Angela Merkel warned EU countries that they must prepare for a no deal Brexit.
The US Dollar is falling across the board as investors sell out of the safe haven in search of riskier assets amid an improved mood in the market. A lot of recent US data has been positive which is fuelling hopes of a speedy recovery in the US, despite coronavirus daily cases jumping by 60,000.
Emergent BioSolutions is the latest company to move vaccine testing forward. Investors are also encouraged by President Trump’s push to reopen schools in Autumn.
Investors will now look ahead to the release of US jobless claims data. Analysts are expecting the increase in claims to continue to slow to 1.3 million, down from 1.4 million last week. Continuing claims, which show the rate of people being re hired is expected to be at 18.95 million from 19.29 million. This is now down 24% from its peak.