gbp-british-pound-coin - GBP
  • Pound (GBP) holds gains as the Internal Markets Bill wins 1st vote
  • UK unemployment ticks higher although claimant count and employment change beat forecasts
  • US Dollar (USD) trades lower on safe haven outflows
  • Vaccine optimism, deals on Wall Street & upbeat Chinese data are lifting the mood

The Pound US Dollar (GBP/USD) exchange rate is advancing for a second consecutive day on Tuesday. The pair settled +0.3% at US$1.2844 in the previous session, but off the high of US$1.2920. At 06:15 UTC, GBP/USD trades +0.14% at US$1.2862.

The unemployment rate ticked higher to 4.1% in the three months to July, up from 3.9%. Meanwhile the claimant count (73.7k vs 100k) and the change in employment (-12k vs -125k exp) were better than forecast, offering some hope that the UK labour market could be in a slightly better place than initially feared.

The Pound is alo advancing despite Prime Minister Boris Johnson’s Internal markets bill clearing its 1st hurdle in Parliament. The bill received a 77 majority with MP’s voting 340 -263 in its favour. Boris Johnson insisted to his party that the bill was an insurance policy and should not need to be invoked should a trade deal be reached with the EU.

The US Dollar is falling lower across the board on Tuesday as investors look to move out of the safe haven in search of riskier assets and currencies amid an improving mood in the market.

Vaccine optimism after AstraZeneca restarted their trial and as Pfizer proposes expanding their trial has boosted optimism that the virus will be beaten. Additionally, deal mania on Wall Street has seen shares bounce higher.

Finally data from China revealed that industrial output jumped +5.6% in August compared to a year ago, its fifth straight month of expansion. Meanwhile retail sales in China rise for the first time in 2020. Sales rose +0.5% in August compared to the previous year as consumers stepped up their spending and the economic recovery in the world’s largest economy gained momentum.

Attention will now turn towards the Federal Reserve monetary policy announcement dye tomorrow. No change to policy is expected