Lower Initial Jobless Claims Figure Drags on Pound US Dollar Exchange Rate
The Pound to US Dollar (GBP/USD) exchange rate shed fresh ground as the latest US initial jobless claims figure showed a smaller increase than forecast.
As claims rose 473,000 on the week, as opposed to the expected 490,000 increase, this encouraged the US Dollar (USD) to gain fresh ground against its rivals.
This stronger showing suggests that the labour market has already started to recover from the speed bump seen in April’s non-farm payrolls report.
With the labour market demonstrating renewed resilience the appeal of the US Dollar naturally improved.
USD exchange rates also benefitted from a stronger uptick in April’s producer price index on the year, suggesting that inflationary pressure continued to pick up strongly.
Bank of England Chief Economist’s Comments Fail to Shore up Pound Demand
Comments from Bank of England (BoE) chief economist Andy Haldane were not enough to offer any support to Pound Sterling (GBP), meanwhile.
Even though Haldane expressed a greater degree of confidence in the economic outlook this failed to shore up the GBP/USD exchange rate.
Investors took little encouragement from his comments, given that Haldane is due to depart the central bank in June.
With the BoE’s most prominent hawk leaving the picture the chances of the central bank tightening monetary policy in the months ahead look distinctly limited.
US Dollar Forecast to Lose Footing on Weaker Retail Sales Growth
Some of the wind could leave the US Dollar’s sails on Friday, however, with forecasts pointing towards a slowdown in April’s retail sales data.
After the sharp increase of 9.8% seen in March investors are expecting to see sales momentum ease to 1% on the month.
Although this would still signal a solid month of consumer spending activity any loss of momentum could still leave the US Dollar vulnerable to some correction ahead of the weekend.
With April’s industrial and manufacturing production figures forecast to also show a slowdown on the month the strength of USD exchange rates could well falter tomorrow.
Pound US Dollar Exchange Rate Vulnerable Ahead of UK Labour Market Data
With the UK set to see another easing in lockdown conditions on Monday the mood towards the Pound may well start to pick up once again.
As the second quarter looks set to see the economy returning to a stronger footing, with less social restrictions now in place, GBP exchange rates are likely to benefit.
Even so, the GBP/USD exchange rate may struggle to extend its bullish run as attention turns towards Tuesday’s raft of UK labour market data.
With March’s unemployment rate expected to pick up the mood towards the Pound could easily sour yet again.
Weakness in average earnings growth may also help to drag the Pound to US Dollar exchange rate lower next week, with lower wage growth likely to limit consumer spending.