The pound to US dollar exchange rate has made material gains higher with a 10 cent improvement since the low point seen below 1.15 over two weeks ago for the GBP vs USD pair. Rates are now sitting at 1.2350 for the pair after poor US jobless claims data were released yesterday.
This morning sees UK Purchasing Managers Index data for the services sector and those looking to buy or sell US dollars would be wise to review these numbers. Services which represent the biggest chunk of the British economy is expected to reach its lowest level on record, Lloyds are forecasting a drop to 34.8 and in the EU an even lower figure of 28.4.
There is likely to be high volatility on the back of today’s data and those with pending requirements could see opportunity depending on whether buying or selling dollars.
The numbers are likely to act as a precursor to the level of unemployment in the UK which is expected to drop substantially. Nomura the investment bank has indicated that UK unemployment could reach 8% over the course of the next few months as UK Gross Domestic product takes a mighty hit going forward.
All eyes are monitoring the US Covid-19 situation closely and any developments or more measures to try and attempt to slow the number of cases could have an impact on the price of GBP USD. Questions are being asked whether the US has done enough to stop the spread of the virus. Today will see the important US non-farm pay roll numbers for the month of March when the Covid-19 market volatility hit. Those clients looking to either buy or sell dollars would be wise to plan around this data release. It will be used as a good barometer as to the extent of damage done to the economy due to the corona virus. There is likely to be high volatility for the GBP USD pair on the back of the release.
This week has been insightful for the state of affairs across the globe with some headline grabbing economic data highlighting how severe the global Covid-19 pandemic really is as the total number of confirmed cases has reached over 1 million. There is some optimism in that China has reported a sharp improvement in its Purchasing Managers Index data for the manufacturing and non-manufacturing sectors. The numbers climbed from a low of 35.7 in February to 52.0 in March which is significant as it indicates expansion in these sectors as China’s businesses start to come back to life.
This is important as the actions which were taken by China where the virus originated are now bearing fruits with Chinese business now starting to come back online. This is likely to give some hope that that this Coronavirus period will be less drawn out than some are forecasting. However, it is too early to say at this time. How both the British government and US administration manage the increasing number of Covid-19 cases will be crucial in determining how business will move forward.
If you’d like to discuss these factors and how they could impact an upcoming currency transfer, feel free to get in touch with me, James Lovick, using the form below.