The Pound Sterling to Emirati Dirham (GBP/AED) exchange rate fell from the high of 5.4949 recorded last week to hit a low of 5.3550 on Monday as UK political concerns limited demand for the Pound and the AED tracked the US Dollar higher.
However, after a softer-than-expected US Advance Retail Sales report reduced the ‘Greenback’s appeal, the GBP/AED exchange rate recovered losses and returned to trending in the region of 5.4202 prior to the release of UK employment and US Inflation data.
Should the UK’s employment report show improvement, it would support the case for a sooner-rather-than-later interest rate increase from the Bank of England (BoE) and bolster the Pound against a number of its currency counterparts.
As it stands, economists are envisaging that the UK economy added 170,000 positions in the three months through February, following the 143,000 jobs added in the previous three months.
If accurate, this gain would see the UK unemployment rate ease from 5.7% to 5.6%.
The number of people applying for unemployment benefits is also expected to slide by -29,500 in March, while the Claimant Count Rate supposedly dipped from 2.4% to 2.3%.
While a drop in joblessness would certainly be Pound supportive, investors will also be taking a keen interest in average earnings data – particularly as non-core UK inflation failed to move into deflation territory last month.
Average earnings including bonuses are believed to have risen by 1.8% in the three months through February, unchanged from the 3M/3M figure recorded in January.
However, the average earnings including bonuses figure is expected to print at 1.7%, up from 1.6%.
If the run of employment numbers match forecasts, the GBP/AED exchange rate could rally on Friday.
However, the direction taken by the AED exchange rate will also depend on the US Consumer Price Index (CPI) for March.
The rate of inflation in the world’s largest economy is expected to stagnate at 0.0%, with core inflation printing at 1.7%.
An uptick in consumer prices would boost the US Dollar as the Federal Reserve has linked higher inflation to higher borrowing costs. However, as negative CPI would probably prevent the Fed from raising interest rates in June or September, a below-forecast result may drive the US Dollar lower.
As the AED is pegged to the US Dollar, such a result may also inspire a slide in the Emirati Dirham.