Pound Sterling to US Dollar (GBP/USD) Exchange Rate Investors Anticipate US Jobs Report

Pound to US Dollar Exchange Rate Floundering Near Lows amid Lack of Sterling Support

Investors have had no reason to buy the Pound (GBP) in recent sessions, leaving the Pound Sterling to US Dollar (GBP/USD) exchange rate near its worst weekly levels as the US Dollar (USD) has been able to sustain some gains.

Due to a rebound from the US Dollar’s recent lows at the beginning of the week, GBP/USD has tumbled over a cent from the week’s opening interbank levels of 1.27. At the time of writing on Friday, GBP/USD trended closer to the interbank level of 1.25.

A lack of notable support for the Pound all week has made it easier for the US Dollar to hold most of its weekly gains.

However, investors are hesitant to make any big movements on the US Dollar ahead of this afternoon’s highly anticipated US Non-Farm Payroll report.

Pound (GBP) Exchange Rates Lack Drive with Brexit Speculation Still Dominant

Uncertainty regarding how the Brexit process will unfold before the end of the year is leaving the outlooks for Britain and the Pound (GBP) highly clouded.

For most of the week, the British currency has been left broadly unappealing amid fears that Britain’s next Prime Minister could take the nation towards a no-deal Brexit.

Signs that Brexit fears have had a major downside impact on UK economic activity have also weighed heavily on the Pound.

This week’s trio of UK PMIs from Markit all fell short of expectations, with some analysts predicting Britain’s economy may have contracted in Q2 and could be in for further weakness in Q3.

Of course, despite these concerns a no-deal Brexit is still not considered the most likely outcome. Many economists predict that in the event a Brexit deal is confirmed, the Pound would see a strong boost in demand.

US Dollar (USD) Exchange Rates Steady as Investors Await Non-Farm Payrolls

This week’s US data has been fairly underwhelming, but despite that the US Dollar (USD) is on track to sustain solid gains against a weaker Pound (GBP).

The US Dollar saw a rebound in demand at the beginning of the week. Investors bought the US currency back from its lowest levels in profit taking when the US and China announced a truce in trade tariff escalations.

Most of the US data published since then has been widely disappointing. This, as well as persistent Federal Reserve interest rate cut bets, have put a cap on the US Dollar’s potential for gains and limited GBP/USD losses this week.

As US markets were closed yesterday to observe the US 4th of July holiday, US Dollar movement has been limited too as traders are now hotly anticipating this afternoon’s key US Non-Farm Payroll report.

Pound to US Dollar (GBP/USD) Exchange Rate Could Recover if NFP Data Disappoints

Before markets close for the week, Pound to US Dollar (GBP/USD) exchange rate investors are eagerly awaiting this afternoon’s US Non-Farm Payroll report from June.

The key US job market report is typically influential, and is closely watched by the Federal Reserve.

As a result, any surprises in today’s US jobs data could have a big influence on Federal Reserve interest rate cut bets.

Weaker than expected US job change or wage stats could lead to a rise in concerns about the health of the US economy, which could lead to a rise in bets of a more aggressively dovish Fed.

On the other hand, stronger than expected US data would have the opposite effect. It could soften Fed rate cut bets, leave the US Dollar stronger, and push the Pound to US Dollar (GBP/USD) exchange rate even lower before markets close for the week.

Josh Jeffery

Contact Josh Jeffery