GBPUSD exchange rates reached a two-week low this morning as investors took fright from the latest UK labour market data which whilst not as bad as expected, highlighted cause for concern ahead.
The Claimant count was below the rise expected, but this was only covering part of the time before the lockdown in the UK. Unemployment has risen to 4% and Average Earnings had also dropped, this data is for up to February, before the harsher measures came into force in March.
The US dollar has also been rising on concerns relating to the global economy, epitomised by the drop in the price of Oil to negative territory. The price has regained but reflects a major oversupply in the market of oil, as the global economy grinds to a halt.
GBPUSD levels tested 1.2388 this morning on the interbank rate, presenting some fresh opportunities for US dollar sellers for pounds. Tomorrow is UK Inflation data and later Government Borrowing data for the UK too, all releases with the potential to move the market.
Could Pound to Us Dollar Rates Drop Further?
A key feature of the US dollar is its status as a safe haven currency and we are seeing a change and shift in the sentiment towards the current economic outlook. Many had been predicting a return to normality and easing of restrictions some weeks ago but this is now looking less likely, it appears it will be more of a gradual easing of the lockdown measures.
In the United States, protests are raging and there is increased tension over the origins of the virus and how it came to be, with Australia having called for an independent investigation into how it was caused.
The currency market can see the US dollar rising when there is heightened fear and uncertainty about the prospects ahead, and any sign that events may continue to be negative could see the US dollar rise against the pound, particularly if we are to see some worsening UK data ahead.
If you have a transfer to buy or sell pounds or US dollars and wish to better understand future events that might change exchanges rates, please do get in touch directly with me to discuss further.