The pound looks to be consolidating at around 1.23 – 1.24 versus the US dollar as we continue to understand the economic impact of Covid-19 on the UK, US and the rest of the world.
Retail sales figures this morning for the UK show a much-anticipated drop in consumer spending throughout March as lockdown took hold and forced us to stay at home and non-essential shops to close. Falling at their fastest pace since records began, sales were down by 4.3%. Looking closer at the statistics, sales were showing a 12% growth in the first three months of March, followed by a sharp decline of 27% after the government-imposed lockdown on March 23.
Much of the growth in early March was due to consumer stockpiling and 21% more was spent in supermarkets. The impact on the pound has been limited as the market awaits consumer sentiment data from the US later today – with a similar picture expected.
Is the United States Risking a Second Wave of COVID-19 Infection?
Several states in the US have already begun to relax lockdown requirements awakening global concern that there is a real risk of a second wave of infection. Florida and South Carolina have relaxed social distancing rules whilst Georgia has reportedly reopened cinemas and bowling alleys according to the Financial Times.
President Trump has been very vocal about reopening the States for business as preparations begin for the Presidential elections in November and government scientists are now reportedly prohibited from public discussions around a second wave of Covid-19. The economic impact of reopening the economy too soon is something which the UK government has constantly advised the UK public against so it will be key to the USD value and US recovery to assess the impact of this bold move going forward.
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