August 20, 2020 - Written by John Cameron
STORY LINK Pound to US Dollar (GBP/USD) Exchange Rate Dips as Safe-Haven Demand Increases on Growing US Jobless Claims
GBP/USD Exchange Rate Sinks as US Jobless Claims Spike in August
The Pound to US Dollar (GBP/USD) exchange rate dipped today, with the pairing currently trading around $1.309.
The US Dollar (USD) edged higher today following the better-than-expected US continuing jobless claims report for August. The figure fell below forecasts from 15.48 million to 14.844 million, leaving many ‘Greenback’ investors relieved that the US economic situation gradually improves.
However, US initial jobless claims continued to climb this month, with the figure rising from 971 thousand to 1,106 thousand. With the figure edging back into the millions, USD investors have become more cautious about the months ahead.
Daniel Zhao, the senior economist at Glassdoor, commented on the data:
‘The modest jump is a stark reminder that claims will likely encounter some turbulence as they fall rather than gliding in for a soft landing.’
Nevertheless, the US Dollar (USD) has benefited from a dovish forecast from the US Federal Reserve, which has buoyed demand for safe-haven currencies such as the ‘Greenback’.
Members of the Federal Open Markit Committee have agreed that ‘the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term’, according to the minutes.
Pound (GBP) Falls as Doubts Grow Over Downing Street’s Hopes for a September Brexit Deal
The Pound (GBP) failed to rise against the US Dollar (USD) today after doubts over Downing Street’s claim that it is aiming for a September EU Brexit deal have continued to weigh on the currency.
This follows comments from the EU’s Chief Negotiator, Michel Barnier, who said that the UK Government had failed to show a ‘willingness to break the deadlock’.
Michel Barnier’s British counterpart, David Frost, also criticised the EU, saying that they had ignored ‘fundamental principles which we have repeatedly made clear’.
As a result, GBP investors have become increasingly concerned for the British economy post-Brexit. Furthermore, fears of a no-deal continue to haunt UK markets.
In other UK economic news, this evening will see the release of August’s GfK consumer confidence report. If Britain’s consumer moral improves this month, then we could see Sterling begin to edge higher.
GBP/USD Forecast: Could a Strong UK Services PMI Boost Sterling?
US Dollar (USD) traders will be keeping a close eye on the release of the flash Markit PMI composite figure for August. Any improvement in the US economy would likely dampen appetite for the ‘Greenback’, leaving investors seeking out risky assets as the world’s largest economy recovers.
Tomorrow will also see the release of the latest US existing home sales figure for July. If this confirms consensus and rises by 14.7%, then we could see the US Dollar suffer as the outlook for the American economy improves.
Pound (GBP) investors will be awaiting tomorrow’s publication of the flash UK services PMI for August. If the UK’s largest and most lucrative sector shows any signs of improvement, then we could see the GBP/USD exchange rate edge higher.
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TAGS: American Dollar Forecasts Pound Dollar Forecasts