GBP/USD Exchange Rate Sinks as Global Covid-19 Rates Continue to Rise
The Pound US Dollar exchange rate fell by -0.4% today as the safe-haven ‘Greenback’ has benefited from souring risk sentiment as India and Japan suffer from rising Covid-19 infection rates. The pairing is currently fluctuating around $1.20.
As a result, investors have sought out the safe-haven US Dollar as fears over rising Covid-19 cases dampen confidence in the global economy.
Japan is currently preparing for a Covid-19 state of emergency in Tokyo, Osaka, Kyoto, and Hyogo.
Today also saw the publication of the latest US Initial Jobless Claims figure for April, which fell from 586 thousand to 547 thousand.
Analysts at Reuters said:
‘Fewer Americans filed new claims for unemployment benefits last week, suggesting layoffs were subsiding and strengthening expectations for another month of blockbuster job growth in April as a re-opening economy unleashes pent-up demand.’
However, with signs of global Covid-19 cases being on the rise, we could see the USD/GBP exchange rate continue to head higher.
Pound (GBP) Exchange Rate Dips Despite Upbeat UK Manufacturing Optimism
The Pound (GBP) fell today because of an absence of any influential economic data. Instead, GBP investors are monitoring the UK’s economic and Covid-19 situation.
According to CBI’s latest industrial trends survey, UK manufacturing optimism has risen at its fastest pace since April 1973.
CBI said in its statement:
‘Sentiment in the manufacturing sector improved at its quickest rate since 1973, likely reflecting an improved outlook for demand conditions.
‘Indeed, new orders last quarter grew at their fastest pace since April 2019, and output volumes are expected to grow rapidly next quarter after being flat in the three months to April.’
As a result, GBP investors are becoming more optimistic about the outlook for the UK economy.
Now that Britain’s lockdown restrictions have been eased, the outlook for the nation’s economic recovery is looking increasingly more positive.
GBP/USD Exchange Rate Forecast: Could an Improvement in the UK’s Services Sector Buoy Sterling?
US Dollar (USD) traders will be awaiting tomorrow’s release of the latest US PMI Composite figure for April.
Any improvement in the outlook for the US economy could improve global risk sentiment and weaken demand for the safe-haven ‘Greenback’.
Tomorrow will also see the release of the flash UK’s Services PMI for April.
If the outlook for the UK’s largest sector continues to improve, then the Pound US Dollar exchange rate would head higher.