Pound US Dollar Exchange Rate Slumps to Monthly Worst despite Improving UK Unemployment Rate

Pound US Dollar Exchange Rate Lower as USD Firms Ahead of Federal Reserve News 

Amid anticipation for upcoming speeches from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen, the Pound US Dollar (GBP/USD) exchange rate is tumbling. The Pound has been unable to avoid losses on UK-EU trade tensions. 

After opening last week at the interbank level of 1.39, GBP/USD edged lower throughout the week as the US Dollar (USD) strengthened. GBP/USD ultimately closed last week at the level of 1.38. 

Since markets opened this week, GBP/USD has been trending even lower. GBP/USD was trending in the interbank region of 1.37 at the time of writing, the pair’s worst levels all month. 

US Dollar investors are awaiting speeches from US officials. Meanwhile, UK PMIs and retail sales results are in focus for the Pound (GBP) this week. 

Pound (GBP) Exchange Rates Fall despite Improving UK Unemployment 

This morning saw the publication of Britain’s January job market report. The data beat expectations, with less jobs lost than expected and the key unemployment rate unexpectedly improving from 5.2% to 5.0%. 

Despite this though, the Pound slipped lower against some major rivals like the US Dollar this morning. This was partially due to continued speculation that the EU could ban coronavirus vaccine exports to the UK. 

According to Lars Sparresø Merklin, Senior Analyst at Danske Bank: 

‘There are growing tensions between the UK and the EU, with more and more EU countries considering backing a vaccine export ban to the UK, which may delay the UK’s vaccination plan.’ 

US Dollar (USD) Exchange Rates Strengthen Ahead of Powell and Yellen Speeches 

The US Dollar’s strength has been mixed over the past week. A more dovish Federal Reserve left the safe haven US Dollar weaker last week, but save haven demand has risen again since markets opened yesterday. 

News that Turkey’s central bank governor had been sacked sent shockwaves through markets yesterday. 

Today, the safe haven US Dollar remains appealing as markets anticipate potentially vital comments from Federal Reserve Chairman Jerome Powell and US Treasury Secretary Janet Yellen. 

According to Alex Wolf, Head of Investment Strategy for Asia at JPMorgan: 

‘The FOMC last week laid out pretty clearly what the Fed’s view is with regard to rates… the next thing that markets will focus on is maybe getting some details from Yellen with regard to further infrastructure investment,’ 

Pound US Dollar (GBP/USD) Exchange Rate Awaits Powell and Yellen, UK PMIs and More 

The coming sessions will continue to be influential for the Pound to US Dollar exchange rate. This evening, speeches from Jerome Powell and Janet Yellen will take focus. 

If there are any signs of hawkishness or more fiscal policy, the US Dollar could continue its current bullish streak and push GBP/USD even lower. 

As for the Pound, it could remain pressured by UK-EU coronavirus vaccine tensions, though analysts expect these tensions will disperse. Merklin at Danske Bank said: 

‘We do not think the EU will implement an export ban (because it may turn out to hit themselves as well) but it is a topic to watch.’ 

There are many key UK ecostats due in the coming days which could also influence the Pound’s movement. 

Pound US Dollar (GBP/USD) exchange rate investors will be highly anticipating UK PMI projections for March due tomorrow, and UK retail sales results from February due on Friday. 

Josh Jeffery

Contact Josh Jeffery