US Senate Approves Historic Coronavirus Stimulus Package
The pound to US dollar rate soared above the 1.18 benchmark for the first time in a week yesterday. This welcome injection of strength was initially provided by Congress and the White House who struck a deal for the biggest fiscal stimulus package in modern American history. Next up was the US Senate, which was unanimously passed the bill by a vote of 96 to 0. It’s now sent to the House of Representatives for the next stage of debate before it can be signed and enacted by US President Donald Trump.
Worth roughly $2 trillion, the emergency measure is designed to prop up the economy during the coronavirus pandemic, by providing critical financial support for families and businesses. The subsequent upswing in market confidence caused the dollar to fall lower against a basket full of currencies, including the pound.
The significance of events surrounding the coronavirus crisis meant the dollar took little notice of the latest durable goods data. The upbeat figure showed that new orders for long-lasting US manufactured goods rose unexpectedly last month. Orders for durable goods that are meant to last three years or more accelerated 1.2% last month – this includes everything from toasters to aircraft. However, orders are expected to decline as the coronavirus suppresses demand and increases the odds of a recession.
UK inflation falls from six-month high
Falling oil prices amid the ongoing coronavirus travel restrictions pushed the UK inflation rate down 0.1 per cent in February to 1.7 per cent. While the rate moved away from the Bank of England’s (BoE) 2 per cent target, having hit a six-month high in January; the figure printed in line with expectations, meaning the pound didn’t get any surprises.
It is worth noting that this figure predates the escalation of the coronavirus pandemic into the global economic crisis being experienced at present. Therefore, economists are forecasting a sharp drop in the next couple of months, as the collapse in global oil prices continues to weigh on inflation.
Looking ahead for GBPUSD
Investors will be waiting for today’s BoE monthly meeting minutes with bated breath. This could provide a road map for the central bank’s monetary policy strategy in the coming days weeks and months.
The number of American’s filing for unemployment is expected to surge to a record-breaking 1.5 million for the week ended 21 March, beating the previous record of 695,000 weekly claims filed back in 1982.
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