The COVID-19 pandemic is sweeping across the globe, and major economies are in uncharted territories. Both the US and the UK are desperate to still their roiled economies. Interestingly, economists paint a gloomy picture for both economies, but the pound happens to be gaining against the US dollar. In the last few hours, the GBP/USD has been a rollercoaster.
BoE holds interest rates at 0.1%
In the early trading hours of Thursday, there seemed to be no clear direction for the pair. This is probably because the market was unsure what to make of the upcoming key events in the UK and across the pond. Between 00:00 hrs. UTC and 07:00 hrs. UTC, the GBPUSD oscillated around 1.185. However, there was clear indication that the market was in favor of the pound.
The Bank of England decided to stay the interest rates at the previous level of 0.1%. In addition, the monetary policy committee (MPC) voted to continue the £200 billion ($243 billion) quantitative easing program. This program entails buying government bonds as well as investment grade corporate bonds. Soon after the news hit the wires, the pound advanced against the greenback by 1.04% to 1.19506.
A sad reality in the US economy
Nonetheless, the pound was to increase the gains to 1.20902 at the time of writing due to a series of disappointing news from the US. In the first place, the US stimulus seemed to hit a snag before ratification by Congress. Particularly, the Democrat side of the negotiation raised issues related to expansion of jobless benefits.
Another issue bedeviling the greenback is the weekly jobless claims data. According to the US Department of Labor, more than 3.3 million Americans filed for unemployment benefits in the week ended March 21. Indeed, this is an indictment of the severity of the COVID-19 pandemic. This is evidence that the reality of the US economy is getting worse. As such, the GBP/USD pair can hold on the current bullish trend for longer.