Updated 12/08/21 14:00: The Pound US Dollar (GBP/USD) exchange rate has weakened this afternoon following the release of the latest initial US jobless claims data.
US jobless claims fell to 375k for the week ending 7 August for the third week of decline in a row. The data gave an upward boost to the US Dollar as the Pound struggled to hold onto any gains on the absence of any notable economic data from the UK this afternoon.
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The Pound US Dollar (GBP/USD) exchange rate has been rangebound since markets opening this morning following preliminary GDP figures from the UK.
At the time of writing the GBP/USD pairing remain around the $1.3862 level as the US Dollar finds support in the passing of Joe Biden’s $1tn infrastructure bill.
Pound (GBP) Steady on Preliminary UK GDP Figures
The Pound (GBP) has been steady against the US Dollar (USD) this morning as preliminary GDP figures from the UK for Q2 has shown the economy expanded by 4.8%, as forecast.
The reopening of the UK services sector looks to have led the economic recovery as businesses recover from the coronavirus pandemic.
Chancellor of the Exchequer, Rishi Sunak commented on the UK’s economic growth, saying:
‘Today’s figures show that our economy is on the mend showing strong signs of recovery, thanks to our Plan for Jobs and successful vaccine programme. I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people. With the fastest quarterly growth rate among the G7 economies we have exceeded expectations, and I’m pleased to see the UK bouncing back.’
Frances O’Grady, TUC General Secretary, was more pessimistic surrounding the figures, commenting:
‘The economy is still fragile, with nearly two million people still on furlough. A premature end to furlough will needlessly cost jobs and harm our economic recovery. The chancellor must extend the furlough scheme for as long as needed to protect jobs and keep the recovery moving.’
US Dollar (USD) Capitalises on Sour Market Mood
The US Dollar (USD) continues to capitalise on a sour global market mood as the capital of Australia imposes snap lockdown to battle the ongoing coronavirus outbreak in the country.
The passing of President Joe Biden’s infrastructure bill has provided additional support to the ‘Greenback’ during this morning’s session.
Commenting on the bill, Joe Biden said:
‘Today, we proved that democracy can still work. We can still come together to do big things, important things, for the American people.’
The US Dollar could push higher this afternoon if the latest initial US jobless claims continue to fall at a sustained pace.
Pound US Dollar Exchange Rate Outlook: US Consumer Sentiment in Focus
Tomorrow, preliminary US consumer sentiment figures for August are expected to drive movement in the ‘Greenback’.
If consumer sentiment figures rise as forecast the US Dollar could push higher across the board heading into the weekend.
A lack of economic data from the UK will see investors keeping an eye on any further domestic coronavirus developments during tomorrow’s session.