The pound to USD exchange rate has fallen lower to below 1.23 for GBP USD last week. US non-farm pay roll numbers released on Friday dropped by 701,000 in March and was significantly worse than the -100,000 that was expected and by as much as seven times. In fact, it was the worst release since March 2019 during the financial crisis.
The rate of unemployment also jumped higher reaching 4.4% in March with the coronavirus being blamed for the job losses and the speed at which they have occurred. Those looking to buy or sell dollars would be wise to plan around all the latest Covid-19 developments which are having a direct impact on the UK and US economies.
As things stand the number of confirmed cases in the US is 300,000 with 3000 deaths. The curve on these charts is being closely followed to try and establish when the US has seen its peak. Countries such as Italy and Spain which have seen a high number of cases are now levelling off. When the US reaches its peak could mark a defining moment. Now that coronavirus numbers have increased to 1.2 million globally, investors are starting to move back into the safe haven of the US dollar.
UK PMI Data
UK purchasing managers Index data for the services sector released last week fell dramatically to a level of 34.5 which indicates contraction in the sector. It follows weak manufacturing data but is particularly concerning considering the services sector represents about 80% of the UK economy. The numbers are pointing towards a deep recession on an unprecedented scale. Please make contact to discuss your currency requirement whether buying or selling dollars.
The Sunday Times has reported that there is some pressure building on the UK government to consider an extension to the Brexit deadline at the end of this year. UK Prime Minister Boris Johnson has to date made clear that he will not extend the transition period so it remains to be seen whether the Covid-19 virus will have an impact on that decision. Brexit continues to be a major driver for the price of sterling and whilst that conversation is more in the background at present the issue is still very much there and is likely to present considerable volatility for GBP vs USD exchange rates going forward. As the Brexit deadline approaches the pound could finds itself under greater pressure which is why a delay could see the pound react.
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.