The pound sidestepped disappointing unemployment data on Tuesday, before sprinting through the 1.42 barrier for the first time since April 2018. By this morning it had gone one step further, advancing beyond the 1.42 benchmark – a fresh three year high.
The jobless measure from The Office for National Statistics (ONS) hit its highest level in five years, rising to 5.1% last in the fourth quarter as the pandemic continued to ravage the UK economy. According to the ONS, around 1.74 million people were unemployed in the three months to December, up 454,000 from the same period in 2019. The jobs data also revealed that 307,000 people were still away from work last month.
It was Scotland’s turn to unveil its roadmap out of lockdown yesterday, following the announcement of England’s plans by Boris Johnson on Monday. Nicola Sturgeon said the reopening of the nation’s economy – including shops, bars, restaurants, gyms and hairdresser – is expected to start in the last week of April. There will be a “progressive easing” of restrictions before then, according to the First Minister.
While the Scottish government’s strategic framework was “deliberately cautious” at this stage, Ms Sturgeon stressed that it would accelerate the easing of restrictions, if the data permits and positive trends continue.
Dollar on defensive
Jerome Powell struck a downbeat tone in written testimony to the Senate Banking Committee on Tuesday. The Federal Reserve Chair underlined the US economy’s ongoing weakness: “The economic recovery remains uneven and far from complete, and the path ahead is highly uncertain,” His remarks were interpreted to mean the Fed sees no need to alter its ultra-low interest rate policies anytime soon.
While Mr Powell acknowledged the potential for a healthier economy, his comments don’t reflect growing market optimism that it will recover rapidly on the back of three key factors: low rates, fiscal stimulus and progress in combating the pandemic.
There was some good news for the dollar yesterday after it was revealed that consumer confidence rose in February to a three-month-high. American’s grew more upbeat on hopes that a $1.9 trillion economic stimulus package will pass through Congress and optimism surround vaccine distributions. However, confidence remains well below pre-pandemic levels.
Investors will be keeping a close eye on today’s Monetary Policy Report Hearings from the Bank of England, and a speech from the central bank’s Chief Economist Andrew G Haldane.
Mr Powell speaks to Congress for the second time this week as part of mandated semi-annual testimony.