The Pound to US Dollar (GBP/USD) exchange rate dipped to a 3-month low since markets opened this morning as the reopening of much of the UK’s economy worries investors as coronavirus cases continue to surge across much of the country.
The GBP/USD exchange rate has dipped to $1.372, the lowest level since April, as the US Dollar capitalises on the weakening Pound this morning.
Last Week: UK Unemployment Rate Causes Sterling to Stumble
The Pound had been trading in a steady range at the start of last week as a lack of economic data from both the UK and US limited any major movement in both currencies.
However on Tuesday a surprise rise in US inflation, from 5% to 5.4% during June, bolstered the US Dollar to new highs as the Pound clung to any gains as the ‘Greenback’ soared.
The Pound found renewed support mid-week as the latest UK inflation data released on Wednesday saw consumer prices hit a three-year high as much of the UK economy began to recover from the worst of the coronavirus.
Thursday saw Sterling stumble as the unemployment rate in the UK edged up to 4.8% during May as many employers struggle to find staff.
The GBP/USD pairing ended the week trending lower as an absence of economic data from the UK limited Sterling further, more so a better than expected retail sales reading from the US allowed the ‘Greenback’ to push higher heading into the weekend.
Three Things to Watch for This Week
- Coronavirus Developments
As much of the UK fully relaxed coronavirus restrictions today, investors will be keeping an eye on any coronavirus developments in the UK. Whilst a delay in data regarding coronavirus statistics is expected, any indication that the easing of restrictions has come too early could cause the Pound to dip.
2. US Jobless Claims
Later on in the week the latest initial US jobless claims could provide support to the US Dollar if the data shows a sustained dip in the amount of people claiming out of work as the US economy enjoys a swift recovery from coronavirus.
3. UK Retail Sales
Pound investors will look to Friday’s UK retail sales figures from June which could cause Sterling to be supported heading into the weekend. Retail sales are forecast to have risen 0.7%, up from the 1.4% contraction the month previous.
A quieter economic week for both the UK and US could see the GBP/USD exchange rate instead driven by any coronavirus developments alongside the global market mood for the first half of the week. Though the latest initial US jobless claims alongside UK retail sales are expected to drive movement in the pairing heading into the weekend.