The U.S. dollar has been the dominate force in the last 24 hours pushing GBPUSD to a low of 1.4085 and EURUSD down to 1.2105. The driving factor behind its success is the continued improvement of the US labour market. Yesterday, we saw Initial Jobless Claims come in at 385k vs an expected 390k. This is the lowest figure we have had since March 14th before the surge in Covid cases when it was at 256k. The ADP Nonfarm Employment number for May came in at 978K, better that the 650K the market was expecting. This sets us up perfectly for Nonfarm Payrolls tomorrow with consensus at 664k; should the number exceed this we could well see more gains for the dollar against major currency pairs.
The pound continues to hold its own against the euro up 0.17% in the last 24 hours. The UK jobs market performance remains a key driving factor in the battle to re-open the economy. Across March and April, 1.3 million Brits were taken off furlough, with the focus on the 18-24 age group as the biggest battle. The retail and hospitality sectors have seen the largest decrease in numbers. During April the number of furloughed retail workers fell by 230,000 closely followed by 180,00 for the hospitality sector.
Yesterday was not a good day for the travel sector with Portugal coming off the green list, and no new countries added to the green list. The governments cautionary approach hopes to increase the chances of the UK getting back to normality with Portugal’s rising coronavirus cases causing concern over a “Nepal mutation of the so-called Indian variant”. At the same time here in the UK the Indian strain has now become the dominant strain over taking the Kent variant that took the headlines all those months ago. The vaccination programme continues to make head way with more than half of UK adults fully vaccinated as of yesterday. The ongoing mutation of Covid continues to put pressure on our ability to get back to normality.
Have a great weekend.
Josh Saunders, Senior Relationship Manager.
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