Pound to US Dollar (GBP/USD) Exchange Rate Firms ahead of US Non-Farm Payroll Report

Pound to US Dollar Exchange Rate Avoids Major Losses despite USD Rebound

The US Dollar (USD) has seen a big rebound from its worst levels this week, but the Pound Sterling to US Dollar (GBP/USD) exchange rate has only seen relatively modest losses so far. The Pound (GBP) outlook remains filled with uncertainties however.

After opening this week at the interbank level of 1.33, GBP/USD briefly continued the previous week’s strong rally. GBP/USD briefly touched on a high of 1.34 earlier in the week, which was the pair’s best level all year.

Since hitting that high though, GBP/USD has tumbled back again. GBP/USD is firming away from this week’s lowest levels at the time of writing on Friday, and is again trending in the interbank region of 1.33.

Investors are now awaiting key data. US Non-Farm Payroll job data due this evening will be one of this week’s biggest stats, and markets also await next week’s UK growth rate stats.

Pound (GBP) Exchange Rates to see Biggest Losses Since June against US Dollar

Despite the Pound (GBP) only seeing fairly limited losses this week, it still marks the British currency’s worst week against the US Dollar (USD) since June.

It comes as the Pound is pushed back thanks to a rebound in demand from the US Dollar.

While the primary cause of losses this week is the US Dollar’s rebound, the Pound was also weighed by major factors casting clouds of uncertainty over the UK outlook as a whole.

Analysts are predicting that hard Brexit fears will worsen again towards the end of the year. On top of this, comments from Bank of England (BoE) officials that Britain’s growth may be weaker than the bank forecast is pressuring Sterling as well.

According to fresh comments from BoE policymaker Michael Saunders today, more policy stimulus is needed:

‘I consider it quite likely that additional monetary easing will be appropriate in order to achieve a sustained return of inflation to the 2% target.’

US Dollar (USD) Exchange Rates Steady Ahead of Non-Farm Payrolls Report

The US Dollar (USD) has seen one of its best weeks in months. Investors are buying the embattled US currency back from its lowest levels in profit-taking.

It comes in reaction to the Euro to US Dollar (EUR/USD) exchange rate hitting its best levels in over two years earlier this week.

However, the US Dollar rebound has been extended by other factors, including a selloff in US tech stocks after months of strong performance.

Analysts at Mizuho said:

‘Near-term, if this correction in big tech continues, it will impact overall risk and fuel further demand for the Dollar,’

Investors are hesitant to make any fresh big shifts in movement on the US Dollar today, as US Non-Farm Payroll data is awaited.

Pound to US Dollar (GBP/USD) Exchange Rate Awaits Non-Farm Payroll Report

This afternoon will see the publication of this week’s most influential US dataset. US Non-Farm Payroll results from August will give investors a better idea of how the US job market is weathering the coronavirus pandemic.

This week’s other US job stats have been mixed. Wednesday’s ADP employment report came in much lower than expected, but yesterday’s US jobless claims report was stronger than forecast.

It is keeping US Dollar investors anxious for the key NFP data. If the NFP report shows that US jobs are being hit harder by the coronavirus than expected, the US Dollar (USD) could be in for further weakness.

On the other hand, stronger US job stats could boost hopes for US recovery, which could push GBP/USD even lower before markets close for the week.

As for the Pound (GBP), analysts predict that Brexit uncertainties will increasingly return to focus if there is no progress in UK-EU Brexit negotiations.

Key UK data due next week, including growth and trade figures, could also influence the Pound to US Dollar (GBP/USD) exchange rate.

Josh Jeffery

Contact Josh Jeffery