- Pound (GBP) looks towards Chancellor Rishi Sunak’s plan for winter
- Wage support scheme expected to follow on from furlough
- US Dollar (USD) surges on safe haven flows
- US initial jobless claims in focus
The Pound US Dollar (GBP/USD) exchange rate is trading lower on Thursday, extending losses for a fifth straight session. The pair settled on Wednesday -0.07% at US$1.2722, well off the lows of US$1.2674. At 06:15 UTC, GBP/USD trades -0.14% at US$1.27.
British Chancellor Rishi Sunak is expected to unveil new emergency schemes to help support the UK economy by propping up jobs and businesses as the UK heads towards what is shaping up to be a very difficult winter.
Rishi Sunak will not provide an Autumn budget which was going to set out a long term recovery plan for the UK. Instead he will roll out of immediate measures to avert a wave of business closures and rising unemployment in the wake of tighter covid restrictions.
The centre piece to the package, which will be announced around midday UTC, is expected to be a wage support scheme similar to that in Germany. A scheme to subsidise wages of people in part time work, which would replace the £39 billion furlough scheme that ends on 31st October.
Official figures show that at the end of July around 5 million people are still relying on the government’s job support programme for some or all of their income. This is mainly concentrated in the hospitality and entertainment sectors.
The US Dollar is pushing higher, extending gains against most peers as signs of an economic slowdown in both Europe and the US unnerved investors, as have rising coronavirus infections and second wave fears.
Risk aversion is dominating in the financial markets, which is reflected in a deep sell off in the equity markets. Investors are seeking out the US Dollar for its safe haven properties. The US Dollar could continue to rise amid the Fed’s warnings that the US economy needs more fiscal stimulus.
Attention will now turn towards the US jobless claims data for further clues on the health of the US labour market. Analysts are expecting to see 843,000 Americans signed up for unemployment benefit. This is only down very slightly from 860,000 initial claims last week.