The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
As the second estimate of the first quarter US gross domestic product saw a downward revision from -4.8% to -5.0% on the quarter, the appeal of the US dollar diminished.
USD exchange rates struggled to find any fresh upside momentum as the US economy continues on track for a sharp recession in the first half of 2020.
Another solid weekly increase in initial jobless claims added to the bearish picture, with more than 40 million Americans now unemployed.
Support for the US dollar could weaken further if April’s trade deficit widens further than forecast, given that the impact of the Covid-19 crisis has yet to materialise in the data.
Forecasts of another jump in May’s unemployment rate suggest that USD exchange rates are likely to come under additional pressure ahead of the weekend.
Unless the labour market can demonstrate signs of resilience in the face of the global pandemic the US dollar may have trouble finding much traction in the near term.
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