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Pound to US Dollar (GBP/USD) Exchange Rises as US Jobless Data Boosts Risk Appetite

August 13, 2020 - Written by John Cameron

The Pound to US Dollar (GBP/USD) exchange rate rose by 0.2% today, with the pairing currently trading around $1.30.

The ‘Greenback’ has suffered today as risk sentiment has improved following a better-than-expected US continuing jobless claims report, which fell from 16.09 million to 15.486 million. Consequently, this has buoyed hopes that the world’s largest economy could be on the road to recovery.

Today also saw US initial jobless claims fall, further boosting confidence in America’s economic progress following the first wave of the Covid-19 crisis.

Daniel Zhao, senior economist at jobs search site Glassdoor, commented on the data:

‘Seeing initial claims dip below 1 million is a positive sign that layoffs are easing, but we’re far from celebrating a steady recovery. Tens of millions of people are still collecting unemployment benefits at a level far above the worst points of the Great Recession.’

‘We’ve not yet seen the light at the end of the tunnel for millions of workers. With no sign yet of a new relief package, the question is whether sheer momentum can keep pushing the economic recovery forward in this historically deep crisis.’

Meanwhile, the Pound (GBP) has performed strongly against its peers today, despite yesterday’s data which showed that Britain had entered its deepest recession since records began.

However, concerns are continuing to grow over Britain’s economy following reports that footfall in London’s West End had fallen by two thirds compared to last year.

London Mayor Sadiq Kahn commented:

‘For decades central London has been the economic engine of the UK, a cultural powerhouse and a gateway for global tourism to the UK. But it now faces a real existential threat from the Covid-19 pandemic.’

Looking ahead to tomorrow, US Dollar (USD) traders will be keeping a close eye on the flash US Michigan consumer sentiment index for August. If this falls below consensus, however, we could see the ‘Greenback’ benefit as concerns grow over the world’s largest economy’s ability to recover.

Tomorrow will also see the release of the flash US nonfarm productivity gauge for the second quarter. Any improvement could weigh on safe haven demand for the ‘Greenback’.

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