Pound to Dollar Rate Fluctuates in Anticipation of Freedom Day
The pound vs dollar rate was choppy on Thursday morning. The UK currency had initially sunk further against the dollar, ignoring yet more upbeat data. Instead focusing on the impending end of pandemic restrictions amid rising infection rates.
Britain is poised to expunge all Covid-linked restrictions from Monday 19 July, including mandatory mask-wearing. Scientists have cautioned that another wave of infections, largely from the more transmissible Delta variant, is inevitable when restrictions are scrapped next week, despite two-thirds of British adults being fully vaccinated.
The pandemic-fuelled concerns seem to be overshadowing evidence that the economy is rebounding strongly from lockdowns. Employment data released by the Office for National Statistics (ONS) on Thursday showed 356,000 jobs were added in June from May and headline wage growth in the year to May grew at its fastest pace since records began in 2000. These figures followed ONS data on Wednesday showing inflation surged past the Bank of England’s (BoE) 2%, reaching 2.5% in the 12 months to June.
The pound managed to gain some traction on Thursday after BoE Monetary Policy Committee (MPC) member Michael Saunders said UK stimulus could be curtailed “fairly soon” because of an unexpectedly sharp rise in inflation. Speculation immediately ensued that the MPC might be preparing to announce the early tapering of its quantitative easing programme when it meets in August.
Having recovered its losses and moved higher, the UK currency was under pressure again later in the day, causing the pound vs dollar rate to hover just above the 1.38 level after the US currency perked up.
Jobless claims hit new pandemic low
The dollar found support from US jobs data on Thursday, recovering some of the ground lost on Wednesday when Federal Reserve Chair Jerome Powell told Congress he doesn’t think the central bank needs to rush the shift towards tighter post-pandemic policy.
New weekly jobless claims fell to a fresh pandemic-era low last week as the rate of new joblessness slowed further, the Labor Department reported Thursday. Initial jobless claims totalled 360,000, matching economists’ forecast and recording the lowest number since 14 March last year – this represented a notable decline from the previous week’s upwardly revised 386,000 claims.
Continuing claims for the week ended 3 July also fell sharply, decreasing by 126,000 to 3.24 million – this significant stride forward represented another fresh low for a jobs market that still some way off getting back to its pre-pandemic state.
Looking ahead
The week concludes with an empty UK economic data calendar. In contrast, two notable economic indicators are slated for release from the US economy today: Retail Sales and the Michigan Consumer Sentiment Index for July.
The post Pound to Dollar Rate Fluctuates in Anticipation of Freedom Day appeared first on Pound Sterling Forecast.
Source: https://www.poundsterlingforecast.com/2021/07/pound-to-dollar-rate-fluctuates-in-anticipation-of-freedom-day/
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