The pound fell barely in opposition to a stronger greenback in early trading on Tuesday, hitting a 12-day low as better-than-expected UK unemployment information had little influence on financial sentiment.
Unemployment profit claims elevated by 12,100 in March, far beneath the median forecast of 172,500 in a Reuters ballot of economists.
However the information relies on the scenario on March 12, 11 days earlier than the federal government declared the lockdown that has paralysed a lot of Britain’s economic system.
So the studying had little impact on a market pushed by the greenback’s energy due a plunge in oil costs that on Monday pushed crude futures to beneath zero for the primary time.
Versus the greenback, the pound was down as a lot as zero.four% at $1.2388, its lowest in 12 days. It was little modified to the euro, at 87.36 pence per euro.
“UK labour market data was largely a non-event… Today it’s all about dollar strength and low oil prices,” mentioned Kenneth Broux, FX strategist at Societe Generale.
As measures to restrict the unfold of the coronavirus, like shutting down companies, take their toll on the economic system, Britain is dealing with what is predicted to be its worst recession in 300 years.
Employers have put greater than 1 million employees on short-term go away, finance minister Rishi Sunak mentioned on Monday, reporting a flood of functions to a authorities programme subsidising furloughed staff’ wages.
“If the scheme proves successful at dampening the rise in unemployment, it will help the UK economy to recover once the lockdown is eased and provide encouragement for a stronger pound further down the road,” MUFG forex analyst Lee Hardman wrote in a word to shoppers.
Societe Generale’s Broux mentioned that euro-sterling was glued to its 200-day transferring common and that trading was within the calm earlier than the storm.
“We’re trading in a narrow range, waiting for a big catalyst to pull us in either direction,” he mentioned.
Authorities finances forecasters final week mentioned unemployment might rise as excessive as 10% with an additional 2 million folks dropping their jobs if the lockdown was solely slowly lifted over the following three months.
PMI information due on Thursday can be extra telling concerning the influence of the lockdown, Broux mentioned.