The optimism was premature
On Wednesday, the British pound dropped to its month low against the American dollar and the Euro. Investors realized that their optimism in coronavirus recovery was premature.
The exchange rate of the British pound against the Dollar and the Euro was also affected by predictions by International Monetary Fund on global economic growth. Investors hoped that the British economy would drop lower than American economy and therefore they began to prefer the American currency.
The Dollar is starring this week. To some extent, it may seem strange as latest date from American labor market show that more than 5 million Americans have applied for unemployment benefits. More than 20 million of Americans have lost jobs during last month. But investors notice that number of new requests for unemployment benefits has been 1 million lower than in last two weeks.
They also expect economic stimulus provided by the Fed if the economy worsens in the U.S. For that reason, the U.S. dollar is perceived as more attractive currency taken into account the possible progress. This week, the British pound has lost around 1,5%.
