Pound US Dollar (GBP/USD) Exchange Rate Soars as US Job Openings Fall
(Updated 16:40 04/10/22)
The Pound US Dollar (GBP/USD) exchange rate climbed to fresh highs over the course of the day. Downbeat US data releases helped to bolster the currency pair.
Data today indicated that job openings in the US fell in August above forecasts to their lowest point in over a year. JOLTs job opening levels fell to 10.053M versus a forecast drop to 10.775M. The figures implied a cooling of labour demand in the US and likely pushed the US Dollar lower.
Additionally, factory orders data for August also indicated a slowdown in the US economy. Orders remained unchanged from the previous month’s fall.
At time of writing the GBP/USD exchange rate was at around $1.1437, which is up roughly 0.9% from this morning’s opening figures.
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Pound US Dollar (GBP/USD) Exchange Rate Trades Narrowly amid Risk-On Mood
The Pound US Dollar (GBP/USD) exchange rate is trending sideways after hitting two-week highs earlier in the day. The currency pair is being boosted by restored confidence in the UK economy. Aggressive Federal Reserve rate hike bets may be weighing on GBP/USD, however.
At time of writing the GBP/USD exchange rate is at around $1.1356, virtually unchanged from this morning’s opening figures.
Pound (GBP) Climbs as Chancellor Announces Early Reveal of Mid-Term Plans
The Pound (GBP) is continuing to recover today after its slump last week. Sterling hit a two-week high against the US Dollar (USD) earlier in the day.
The currency is likely continuing to find support after a U-turn from the UK government on Monday concerning its divisive mini budget.
News today that Kwarteng will also be bringing forward the announcement of his medium-term fiscal plans may have also be boosting GBP today.
Economist warned that the Pound’s rally may not be directly linked to Kwarteng’s turnaround, however.
Seema Shah, chief global strategist at Principal Global Investors, said:
‘It is true that sterling has had a mini-rally but, firstly, this was from historically weak levels to begin with and, secondly, the new value of sterling prices in steep rate rises which have been made necessary by the chaotic market response to the Chancellor’s growth plan.’
US Dollar (USD) Slumps as Risk Appetite Returns
The US Dollar (USD) is falling today amid a return of global risk appetite. A drop in US Treasury bond yields is also likely weighing on the safe haven ‘Greenback’.
USD is being underpinned by persistent bets on further interest rate hikes from the Federal Reserve, however. Markets are increasingly pricing in another 0.75% interest rate hike from the central bank at their next meeting.
Comments from Fed policymaker John Williams potentially added to expectations of aggressive action. Speaking on Monday, Williams stated that ‘inflation is far too high’ and that the Fed’s job was ‘not yet done’.
GBP/USD Exchange Rate Forecast: Will US Labour Market Shifts Bolster Fed Rate Hike Bets?
Looking to the rest of the week for the US Dollar, multiple employment data releases throughout the week are set to prompt mixed movements in the currency. Later today, a forecast drastic drop in job opening figures could see USD slip amid signs of an economic slowdown.
Whilst Wednesday’s ADP employment change figures have generally been out of step with other data releases, investors may see the forecast rise increase as an indicator of Friday’s figures.
A predicted robust increase to non farm payrolls in September could help to bolster USD, however. Signs of strong and widespread hiring may give the Fed extra support to implement further interest rate hikes. Additionally, if unemployment remains at a seven-month high at 3.7% then it could have a similar effect.
As well as the week’s employment data, a slight narrowing of the country’s trade deficit could see further gains for USD. A forecast drop in private sector, also on Wednesday, could limit any potential gains however.
For the Pound, the final reading of September’s PMI for the services sector could weigh on the currency. The figures are set to confirm a contraction in the sector amid the UK’s cost-of-living crisis.
Sterling may also be affected by any further shifts in UK government policy. Markets will be looking the PM Liz Truss’ speech at the Conservative party conference on Wednesday for any signals of further U-turns.