Pound US Dollar (GBP/USD) Exchange Rate Climbs from 11-Month Low

GBP/USD Continues Uptrend Following US Data Release

(Updated 17:00, 12/11/2021) The Pound US Dollar (GBP/USD) exchange rate continued trending up in the second half of today’s session, as the US JOLTS job openings were revealed alongside the University of Michigan’s consumer sentiment data: both datasets missed expectations.

While falling on last month, the number of US job openings exceeded expectations, reflecting a pattern of US employees leaving their jobs to search for better working conditions and pay. The number of hires declined by 38,000 to 6.459 million, while total separations including quits, layoffs and discharges, and other separations rose by 186,000 to 6.218 million.

Commenting on the phenomenon earlier in the season, Robert Reich, UC Berkeley professor of public policy and former U.S. Secretary of Labor, said:

‘There is no ‘labor shortage.’ There’s a child care shortage, a living-wage shortage, a hazard pay shortage, a paid sick leave shortage, and a healthcare shortage. Until these shortages are remedied, Americans won’t return to work anytime soon.’

Meanwhile, the preliminary Michigan consumer sentiment reading for November showed an unexpected decline as those surveyed expressed concern over an escalating inflation rate and perceived lack of appropriate action.

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Pound US Dollar Exchange Rebounds on USD Profit-Taking

The Pound US Dollar (GBP/USD) exchange rate is edging up this morning from an eleven month low as the US Dollar experiences some profit taking. Meanwhile, the Pound is supported as investors are optimistic about Brexit talks.

At the time of writing, GBP/USD is trading at $1.3395 up 0.2% from today’s opening levels.

US Dollar (USD) Trades in a Narrow Range Ahead of Jobs Data

The US Dollar (USD) is trading up against the majority of its peers this morning, although investors’ profit-taking has exerted some downside.

In the spotlight today, JOLTS job openings are expected to reveal a decrease in vacancies, as firms reopening after pandemic closures slowly begin to fill vacant positions. Michigan consumer sentiment preliminaries are also scheduled for this afternoon.

Initial jobless claims earlier in the week decreased, reporting the lowest number of benefit claimants since the pandemic hit in March 2020. Soaring vacancies over summer and autumn enabled more people to find employment as extra jobs were created to meet demand for services and products.

Somewhat counterbalancing the effect, the US experienced an enhanced quit rate in recent months as workers across the country sought higher pay and better employment conditions. Gus Faucher, chief economist at PNC, observed:

‘If you’re unhappy with your job or want a raise, in the current environment it’s pretty easy to find a new one… We’re seeing people vote with their feet.’

Worker dissatisfaction may skew today’s figures; although analysts are optimistic that the employment situation is improving.

Pound (GBP) Finds Strength on Monthly GDP, Brexit Optimism

The Pound (GBP) traded in a mixed range yesterday as UK GDP data revealed less growth than expected on a quarterly basis, but exceeded monthly forecasts with a 0.6% rise.

Today, investors appear to focus on the positive. A surge in the service industries encouraged optimism, as an increase in health sector output occurred with doctors resuming face-to-face appointments.

Chancellor of the Exchequer Rishi Sunak also strikes an upbeat tone, commenting:

‘The economy continues to recover from [COVID-19], and thanks to schemes like furlough, the unemployment rate has fallen for eight months in a row. We’re forecast to have the fastest growth in the G7 this year.’

Optimism over Brexit negotiations is also applying Sterling upside. While talks took a tense turn earlier in the week, both UK and EU officials now seem willing to put aside their differences.

Lord Frost, the UK’s Brexit Minister, spoke of ‘a real opportunity to turn away from confrontation, to move beyond our current difficulties and put in place a new, and better, equilibrium.’

GBP/USD Exchange Rate Forecast: US Data to Drive Movement?

US data later on today is likely to be the main catalyst for movement in the Pound US Dollar exchange rate.

If job openings decline as expected, the US Dollar may enjoy tailwinds: an increase in consumer sentiment is also likely to buoy USD.

Meanwhile, the Pound is likely to find direction on a speech from Bank of England (BoE) policymaker Jonathan Haskel.

Olivia Evershed

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