Daily Currency Update

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US unemployment sky rockets

GBP - British Pound

Prime Minister Boris Johnson yesterday announced the relaxation of some restrictions implemented on the back of the Coronavirus outbreak in an effort to reboot an economy heading for its worst performance in over 300 years. Further to a public address by Johnson last night, guidelines are due to be published by the government at lunchtime which are expected to confirm it is fine to see close family/friends outside however a 2 metre distance must be maintained. Anyone who works in construction and manufacturing has been asked to return to work with schools and shops expected to return in early June, with hospitality business' a month later, dependent on a continuation of the death rate falling like it has over the past three weeks. Throughout this phased reopening we can expect social distancing measures to remain in place and its this which will be key to ensuring a second wave doesn't hit the UK in late summer. GBP/USD is lower this morning, dropping back under 1.24 as the markets digest Johnson's announcement. GBP/EUR is heading back towards 1.14 with markets possibly shorting the pound on the back of a lack of clarity from the PM with some hoping we would get more clearly defined guidelines.

Key Movers

As the UK enjoyed a long weekend on Friday to commemorate the 75th anniversary of VE Day there was yet more dreadful data posted by the US as the impact Covid-19 started to filter through painting a picture of what the Coronavirus has done to the world's largest economy. The monthly jobs report, although slightly better than predicted still painted a worrying picture with the closely monitored Non Farm Payrolls figure dropping by a eye-watering 20.5m for the month of April. This figure smashes the worst seen during the worst of the financial crisis of 2008/2009 where the biggest month's drop was around 660k. Another impressive stat (albeit for the wrong reasons) was the level of unemployment which jumped from 4.4% to 14.7%, again much higher than during the GFC where it gradually peaked to around the 10m mark. The US economy has taken a hammering over the past couple of months and with an election due in November, Donald Trump will likely up the anti-Chinese rhetoric in an effort to gain support for a re-election whilst many Americans sign on for the first time in years.

Later this week we have GDP numbers from the UK and Germany with quarterly drops of -2.5% and -2.3% expected respectively. We also have an interest rate decision from New Zealand with no change of policy expected and retails sales numbers from the States which is expected to show a sharp decline.

Expected Ranges

GBP/USD: 1.23 - 1.2470 ▼

GBP/EUR: 1.1390 - 1.1510 ▼

GBP/AUD: 1.89 - 1.9060 ▼

GBP/CAD: 1.72 - 1.7360 ▼