Pound Sterling US Dollar (GBP/USD) Exchange Rate Edges Higher as US Jobless Claims Jump
UPDATE: The Pound Sterling US Dollar (GBP/USD) exchange rate rose this afternoon, leaving the pairing trading at around $1.2364.
The Dollar slumped this afternoon following the release of record US jobless claims, which saw over 26 million Americans apply for unemployment in the last five weeks.
‘Greenback’ sentiment suffered as this confirmed that all jobs created during the US employment boom were wiped out.
However, the data from last week sparked some optimism the worst may be over for the US labour market. This was the third straight weekly decline in new jobless claims.
Commenting on today’s data, chief economist at Bank of the West, Scott Anderson noted:
‘The US economy in haemorrhaging jobs at a pace and scale never before recorded. It compares to a natural disaster on a national scale.’
Pound Sterling US Dollar (GBP/USD) Exchange Rate Rises as Oil Prices Rebound
The Pound Sterling US Dollar (GBP/USD) exchange rate edged higher, leaving the pairing trading at around $1.2347.
The ‘Greenback’ fell back on Thursday after a rebound in crude oil prices, leaving the pairing largely flat.
The Dollar initially shrugged off the rebound in oil prices, although risk appetite was boosted after oil futures extended gains.
However, the rebound helped to calm markets that were unnerved after coronavirus pummelled global demand for the commodity.
Commenting on this, Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo said:
‘The Dollar-oil trade meant that the Dollar rose when commodities fell, but this dynamic is starting to not work.
‘The Dollar is not strong against other currencies. This shows that the foreign exchange market, at least, is starting to stabilise.’
Sterling (GBP) Edges Higher despite Record Low Flash PMI
Meanwhile, data from Markit showed record declines in both the UK manufacturing and services sectors.
The flash PMI composite slumped to a record low 12.9 from March’s 36. This was the fastest fall in activity since comparable figures were compiled over 20 years ago.
However, this did little to stop Sterling from edging higher against the US Dollar on Thursday morning.
Commenting on the disappointing data, CIPS Group Director Duncan Brock said:
‘The combined performance of services and manufacturing plunged the UK private sector into the twilight zone in April as the PMI index posted 12.9, again surpassing the survey low of 38.1 in November 2008.
‘Around 81% of UK service providers reported lower business activity in April, which compared with 38% during the worst single month of the global financial crisis.
‘The overall services fall in output was faster than manufacturing and the steepest since records began in 1996 as social distancing measures enforced for the population stopped everything in its tracks and an eerie silence descended over the UK’s streets.
‘There’s nothing to applaud in this month’s results. Even the slight rise in optimism from last month’s record low feels like a blip to what the economy is facing in 2020. The figures for April could not be more worrying but as we may not have reached pandemic peak yet, there’s much more bad news to come.’
Pound Dollar Outlook: US Unemployment in Focus
Meanwhile, looking ahead to this afternoon, the safe-haven US Dollar (USD) is likely to edge higher against the Pound (GBP).
It is likely a record 26 million Americans have sought unemployment benefits over the past five weeks. This would confirm that the jobs created in the longest-ever employment boom in US history were wiped out due to the coronavirus pandemic.
Today’s data will add to a growing list of increasingly disappointing US data, which will dampen risk appetite and send the Pound US Dollar (GBP/USD) exchange rate lower.