Pound Sterling US Dollar Exchange Rate News: GBP/USD Climbs as US Payrolls Miss

GBP/USD Exchange Rate Advances on Subdued Payroll Numbers

UPDATE: The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending higher this afternoon following the publication of the latest US labour report.

While the data revealed that the US unemployment rate fell to a 48-year low last month, markets were still left disappointed as payroll numbers printed much lower than expected, while August’s average earnings figures were also revised down.

Meanwhile the Pound remained buoyed at the end of this week’s session by reports that the UK and EU are ‘very close’ to reaching a Brexit agreement.

GBP/USD Exchange Rate Pressured by Surging US Bond Yields

The Pound Sterling to US Dollar (GBP/USD) exchange rate is languishing close to a one-month low this morning after US bond yields stuck new multi-year highs on Wednesday.

At the time of writing the GBP/USD exchange rate appears rangebound this morning, with the pairing edging up from yesterday’s worst levels but still trading below $1.30.

US Dollar (USD) Exchange Rates Surge as US Bond Yields Explode

The US Dollar (USD) remains well positioned against the Pound (GBP) and the majority of its other peers this morning, after the Dollar index struck a new six-week high on Wednesday as 10-year US  bond yields stuck their highest levels since 2011.

This jump in yields appeared largely fueled by some strong US data, particularly the release of the latest ISM non-manufacturing PMI, which surprised USD investors by surging from 58.5 to 61.6 in September.

Bond yields generally reflect where investors think interest rates may be heading in the future.

Rodrigo Catril, Senior FX Strategist at the National Australia Bank, said:

‘The move higher in US Treasury yields … [was] triggered by a jump in the September ISM Non-manufacturing print to a new cycle high of 61.6 and the second highest in the history of the series.’

The PMI figures were also accompanied by a stronger-than-expected lift in US ADP employment figures last month, with a solid rise in private sector payrolls accentuating the appeal of the US Treasury yields.

Further accelerating the US Dollar in overnight trade were some hawkish remarks from Jerome Powell late on Wednesday evening.

The Federal Reserve Chair, continued to talk up the US economy as he spoke yesterday, hailing the ‘remarkably positive outlook’ for US economic growth, thus bolstering expectations of a December rate hike from the Fed.

Pound Sterling (GBP) Muted as May’s Speech Fails to Inspire Investors

At the same time, the Pound (GBP) appears rangebound this morning as investors were left unimpressed by Theresa May’s Conservative Party conference speech (and dance) on Wednesday.

Markets were hoping that the Prime Minister may use her keynote speech to outline a revamped approach to Brexit negotiations.

However GBP investors but were left disappointed as she stuck to her guns, offering no compromises on her Chequers plans and continuing to argue that ‘no-deal is better than a bad deal’.

GBP/USD Exchange Rate Forecast: US Payroll Data to Propel the ‘Greenback’ Even Higher?

Looking to the tail end of this week’s session, investors are bracing for further weakness in the Pound US Dollar (GBP/USD) exchange rate as the US publishes its latest labour figures.

Economists currently forecast that non-farm payrolls will have seen another robust expansion in September, prompting a fall in the unemployment rate and likely diving the US Dollar higher.

However any ‘Greenback’ gains could be tempered somewhat by the accompanying wage figures as analysts predict average hourly earnings will have slowed slightly over the same period.

Meanwhile the Pound may look to make some limited gains tomorrow morning should Halifax’s UK house price index have risen in line with expectations last month.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail