Pound to US Dollar (GBP/USD) Exchange Rate Jumps on US Jobless Claims Shock

Pound to US Dollar Exchange Rate Extends Recovery as US Data Shocks Markets

Updated 14:33 GMT 26/03/2020:

Investors continued to buy the Pound Sterling to US Dollar (GBP/USD) exchange rate this afternoon. The US Dollar (USD), weakened by calmer market sentiment and dampened safe haven demand, was hit by dire US data.

The latest US jobless claims report shocked investors with a far worse than expected rise in US jobless claims. Jobless claims rose by over 3 million, showcasing the massive impact of the coronavirus pandemic on US economic activity.

The US Dollar weakened as a result of the report. This made it easier for GBP/USD to continue this week’s advance. GBP/USD is currently trending in the interbank region of 1.19 after having regained over half of last week’s huge losses.

Pound (GBP) investors meanwhile, are still awaiting UK fiscal stimulus news from Chancellor Rishi Sunak.

(Originally published 09:26 GMT 26/03/2020)

Pound to US Dollar Exchange Rate Trends Nearer Weekly Highs despite Mixed Sterling 

Despite a lack of solid support for the Pound (GBP), the Pound to US Dollar (GBP/USD) exchange rate has continued to sustain gains this week. The US Dollar (USD) remains under pressure as markets sell safe havens. Upcoming US data is making investors anxious too. 

Since opening this week at the interbank level of 1.16, GBP/USD has been largely trending with an upside bias. For now, GBP/USD has sustained a little more of a recovery after hitting a three-decade-low of 1.14 last week. 

GBP/USD has been able to hold most of this week’s decent gains. At the time of writing on Thursday, GBP/USD is trending in the interbank region of 1.19 and has recovered around half of last week’s significant losses. 

Sterling investors are anticipating more fiscal stimulus measures set to be unveiled soon by the UK Treasury. Meanwhile, US Dollar investors are anxiously awaiting US data due this afternoon which could show how many jobs have already been lost due to the coronavirus pandemic. 

Pound (GBP) Exchange Rates Steady in Anticipation of Upcoming Coronavirus Developments 

Sterling’s (GBP) performance has been a little better this week so far, but this has largely been due to US Dollar (USD) weakness. 

The Pound still lacks the drive to make its own strong gains. Britain’s coronavirus outlook remains highly concerning to investors and some analysts remain concerned that the government hasn’t gone far enough with stimulus. 

This is why Pound investors are eagerly awaiting the treasury’s next fiscal stimulus measures. UK Chancellor Rishi Sunak is expected to ramp up support for self-employed workers soon. 

On top of this, Pound traders are awaiting the Bank of England’s (BoE) policy decision. While the bank has made many emergency policy moves in recent weeks, the bank’s scheduled decision today could still be highly influential. 

US Dollar (USD) Exchange Rate Investors Anxious Ahead of US Jobless Stats 

The US Dollar (USD) has seen weaker performance this week so far. As a safe haven currency, it has been sliding as markets calm slightly and investors become a little more willing to take risks again. 

Safe haven demand has softened largely due to the massive stimulus packages created by the Federal Reserve and US Congress. They have bolstered hopes for the economy to weather the coronavirus pandemic. 

On top of softer safe haven demand, the US Dollar is also being weighed today by market anxiety over the health of the US job market. US jobless claims data is due later, and some investors are expecting dire figures. 

Pound to US Dollar (GBP/USD) Exchange Rate Outlook Could Shift on Today’s News 

There are multiple key events today that could influence the direction of the Pound to US Dollar (GBP/USD) exchange rate in the coming days if they surprise. 

First up is the Bank of England’s (BoE) upcoming March policy decision. The bank could update its outlook and a surprising tone could drive Sterling (GBP). According to Haresh Menghani from FXStreet: 

‘Investors seemed reluctant to place any fresh directional bets, rather preferred to wait on the sidelines ahead of the latest BoE monetary policy update, scheduled to be announced later during the European session.’ 

Then, US jobless claims will be published during the American session. 

If US data is worse than expected, the scale of the coronavirus pandemic could cause fresh market anxiety. This may, however, actually lead investors back to safe haven currencies like the US Dollar (USD). 

Further fiscal policy news, such as expected self-employment help from the UK Treasury, could also influence the Pound to US Dollar (GBP/USD) exchange rate. 

Josh Jeffery

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