Pound US Dollar (GBP/USD) Exchange Rate Buoyed after Thursday’s Drop
The Pound US Dollar (GBP/USD) exchange rate is buoyant this morning following on from a dramatic slump on Thursday. This comes despite domestic news rattling Sterling, as the UK sees more bleak economic news.
At the time of writing, the GBP/USD exchange rate was trading at around US$1.1210, showing a rise of 0.45% from the morning’s opening rates.
Pound (GBP) Buoyed despite Domestic Turbulence
The Pound (GBP) strengthened this morning as investors repositioned following a dramatic plunge in yesterday’s trade.
The rise comes despite domestic news continuing to rock the UK. The latest survey of the UK labour market revealed that recruitment began to slow over September, with the number of available vacancies shrinking.
Adding to pressure on GBP is the housing market. House prices are assumed to have peaked, with a fall in prices predicted over the next two years.
Tom Bill, Head of UK Residential Research at Knight Frank, expanded upon this, stating:
‘It’s a fairly safe bet that UK house prices have now peaked. The impact of rising mortgage rates will begin to hit demand and spending power in coming months, which we believe will lead to a fall of 10% over the next two years for UK prices. We may see mortgage rates fall to some extent if financial markets become more reassured by the government’s economic plan but the events of the last fortnight have been a reminder that the era of ultra-low rates is coming to an end.’
Despite the signs of the UK entering an economic recession becoming clearer, investors remain bullish and place strong bets on Sterling. However, GBP’s gains may be limited.
US Dollar (USD) Mixed as Markets Anticipate Payroll Release
The US Dollar (USD) has seen volatile trade in today’s session so far, despite an ever-bleaker global economic outlook.
While investors have flocked to the safe-haven ‘Greenback’ in recent days, USD is faltering today, wavering lower against most major peers.
The downside comes as markets brace for this afternoon’s non-farm payrolls release, which could potentially have a huge impact on global markets. USD investors are seemingly cautious ahead of the data, which is leaving the ‘Greenback’ open to losses.
However, USD’s losses may be limited as the currency remains underpinned by Federal Reserve rate hike bets. The Fed has continued to reiterate their desire to raise interest rates in order to combat inflation in the US economy, prompting USD to remain an attractive bet for investors.
Pound US Dollar (GBP/USD) Exchange Rate Forecast: Non-Farm Payrolls in Focus
All eyes are on the incoming non-farm payroll data release this afternoon. Economists expect the US to have added 250,000 jobs in September. While this would be the smallest monthly job increase since December 2020, it is still a fairly robust reading.
That said, the slowdown in jobs growth could be a sign that the US economy is entering a decline, which may shore up the US Dollar against riskier currencies due to its reputation as a safe-haven currency. With the world’s largest economy showing signs of economic downturn, the markets may flock to the ‘Greenback’, thereby boosting USD exchange rates.
In the UK, domestic news remains the chief catalyst of movement for the Pound, as markets continue to respond to the economic and political uncertainty.