Pound US Dollar Exchange Rate at New Multi-Year-Best despite Unsurprising Gloomy UK Jobs Report

Pound US Dollar Exchange Rate Climbs Ahead of Fed Chairman Powell Testimony 

Investors have continued to buy the Pound US Dollar (GBP/USD) exchange rate higher and higher, despite fresh pressure on the Pound (GBP) in recent sessions. Markets remain optimistic about Britain’s coronavirus situation while the pandemic takes its toll on the US. 

Last week saw slightly mixed movement as the US Dollar (USD) attempted a rebound rally, but GBP/USD ultimately climbed higher again. GBP/USD gained over a cent throughout the week, jumping from the interbank level of 1.38 to 1.40. 

This was the first time GBP/USD has been above the key 1.40 level since early 2018, and the pair continues to climb. At the time of writing on Tuesday, GBP/USD trends just below its best levels since April 2018. 

While the Pound rally could be running out of steam, the Pound to US Dollar exchange rate could keep climbing if US Dollar weakness persists. 

Pound (GBP) Exchange Rates Little-Impacted by Gloomy UK Job Market Report 

This morning has seen the publication of Britain’s January job market report. While a key dataset, the slightly gloomy print has had no notable impact on the Pound’s movement or the market’s optimism over the UK outlook. 

The key unemployment rate worsened to 5.1% as expected. More jobs were lost than expected, but the latest wage data was better than forecast. 

Sterling keeps climbing on hopes that Britain’s economy will be one of the first major economies to recover from the coronavirus pandemic. 

Still, some analysts have expressed concern that without another extension of the UK government’s furlough scheme, the job market could take an even worse hit in the coming months. 

US Dollar (USD) Exchange Rates Weak as Markets Await Fed Chairman Speech 

The US Dollar continues to be one of the market’s least appealing major currencies. Investors are selling the safe haven US Dollar on a combination of higher market optimism and weak US ecostats. 

The US economy has been hit hard by the coronavirus pandemic. This is also why investors are doubtful that Federal Reserve Chairman Jerome Powell will have much to hawkish about in an upcoming speech. 

According to Analysts at UniCredit: 

‘Mr. Powell will very likely reiterate that the Fed is a long way from meeting its goals and that it will likely take some time before “sufficient progress” has been made to taper its bond purchase program’ 

Pound US Dollar (GBP/USD) Exchange Rate Focused on Powell Speech 

Most of this week’s key UK news and data has come in already. For now, Pound to US Dollar investors are awaiting an upcoming speech from Federal Reserve Chairman Jerome Powell. 

Powell is expected to maintain a cautious stance on the US economic outlook and signal that the bank will not tighten policy any time soon. This means that the US Dollar isn’t likely to see much fresh support from the speech. 

However, if Powell surprises investors by being more optimistic than expected on the US economy, the US Dollar could mount a strong advance. 

If Powell’s speech offers no fresh support to the US Dollar’s performance, the currency could find support in data published in the coming sessions instead. 

Stronger than expected US goods or growth rate figures on Thursday for example could give the US Dollar the footing it needs to mount a stronger recovery against the Pound’s highs. 

As for the Pound, continued optimism over Britain’s coronavirus situation could keep it strong.  

Some analysts believe the Pound’s bullishness is running out of steam though, so if sentiment on Sterling becomes more bearish the Pound US Dollar (GBP/USD) exchange rate could tumble. 

Josh Jeffery

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