Pound Rallies, Euro Dips, US Dollar Steady ahead of Payrolls

GBP/EUR Exchange Rate: Pound Boosted by Upwardly Revised Data

The Pound Euro exchange rate has surged over the last week, rebounding from last week’s selloff.

Upbeat UK data releases drove GBP/EUR higher, starting with the finalised upwardly revised UK second quarter GDP growth rate that rose from 4.8% to 5.5%.

Finalised PMI data also supported Sterling after private sector growth grew more than expected. September’s manufacturing growth slowed to a seven-month low but beat forecasts at 57.1, while the service sector unexpectedly rose to 55.4, up from 55 in August.

Looking ahead, the UK’s August unemployment data released early next week may drive some movement in the Pound, although the effect of the furlough scheme ending will be reflected in October’s data.

GBP/USD Exchange Rate: Pound Recovers as Fuel Shortages Ease

The Pound US Dollar exchange rate recovered a large part of its losses through the last week as UK fuel shortages eased.

Demand began to slow down, and the army and additional HGV drivers began delivering and resupplying petrol stations.

However, concerns persist over the UK economy and stagflation due to supply chain problems, more shortages, rising inflation and the mounting energy cost crisis, leaving the Pound vulnerable.

Soaring natural gas prices threaten to weaken the GBP/USD this week, as the costs hit consumers and businesses, and in turn souring market sentiment.

USD/GBP Exchange Rate: US Dollar Steady ahead of Payrolls Report

The US Dollar Pound exchange rate trended lower over the past week as market sentiment cautiously improved and weighed on the safe-haven ‘Greenback’, while supporting Sterling.

However, the US Dollar’s losses were limited by upbeat ISM manufacturing and services PMI data that indicated better-than-expected growth in private sector activity.

Looking ahead, market mood threatens to sour again and support safe-haven USD as the possibility rises that the US could default on debt payments, with Congress at an impasse on increasing the government debt ceiling.

The US non farm payrolls on Friday will be the key driver of movement in USD/GBP. With employment forecast to rise, the jobs report may provide the Federal Reserve with the evidence it needs to begin imminent tapering of its monetary policy.

EUR/USD Exchange Rate: Euro Dips as Inflation Soars

The Euro struggled against a stronger US Dollar through this week’s session due to the negative correlation in the pairing.

Rising Eurozone inflation weighed on the single currency at the end of last week as September’s reading hit a 13-year high of 3.4%, above forecasts of 3.3%. In light of the European Central Bank’s (ECB) view that inflationary pressure is transitory, concerns that inflation could overheat dented the Euro.

The Euro also came under pressure from slowing growth in the manufacturing and services PMIs, with the latter at its slowest pace in four months.

Looking ahead, the Euro US Dollar exchange rate could continue to slip as soaring natural gas prices hit the Eurozone, increasing concerns over economic growth.