Pound US Dollar (GBP/USD) Exchange Rate Slumps as Investors Analyse US Jobs Data

Pound US Dollar (GBP/USD) Exchange Rate Slumps as Investors Analyse US Data

Article updated 16:52, 1/9/2023:

The Pound US Dollar (GBP/USD) exchange rate is cratering this afternoon, as investors mull over the afternoon’s American data.

While the US Dollar initially fell after the latest unemployment rate printed above expectations, the mood has turned to focus on the non farm payrolls data.

Here, the figure printed above forecasts, showing more jobs were created in August than initially expected. Because of this, investors  moved to support the ‘Greenback’.

At the time of writing, GBP/USD is trading at around US$1.2596, a fall of just over 0.6% from the morning’s opening rates.

Original article continues below:

Pound US Dollar (GBP/USD) Exchange Rate Narrows Ahead of US Jobs Data

The Pound US Dollar (GBP/USD) exchange rate is trading within narrow boundaries this morning, ahead of the afternoon’s US labour data.

At the time of writing, GBP/USD is trading at around US$1.2681, showing little movement from today’s opening rates.

US Dollar (USD) Calm as Investors Anticipate Key Jobs Data

The US Dollar (USD) is off to a slow start this morning, as investors look ahead to this afternoon’s data releases.

Firstly, August’s non farm payrolls data is scheduled to print. Economists are forecasting that the number of private sector jobs created fell from 187,000 to 170,000 on a monthly basis.

If this prints accurately, it may weigh heavily on the US Dollar by providing another sign of growing slack in the jobs market. However, the unemployment rate is expected to hold at 3.5%, which could reaffirm the Federal Reserve’s hawkish standpoint.

Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE at ING, explains:

‘This remains on its cycle lows, continues to support strong US consumption, and keeps the Fed on its hawkish guard. We will also see the release of average hourly earnings for August, which are expected to moderate to 0.3% month-on-month from 0.4%.’

This is then followed by the ISM manufacturing index, reflecting sector activity in August. Economists anticipate a modest improvement in the reading, but for it to remain in contractionary territory.

Pound (GBP) Muted as Investors Continue to Analyse BoE Speech

The Pound (GBP) is seeing muted trade this morning, as investors continue to analyse comments from Bank of England (BoE) Chief Economist Huw Pill.

Pill stated that the policy rate would resemble a ‘table top mountain’, with the implication of a plateau. As such, investors are viewing this as clues towards an imminent pause, but also holding the terminal rate for a long time.

However, owing to a lack of clarity, investors are unsure about the BoE’s forward guidance, prompting middling trade.

Elsewhere, a cautious market mood is keeping a lid on any potential gains for Sterling, due to its increasingly risk-sensitive nature.

Pound US Dollar Exchange Rate Forecast: Lack of Data to Mute Pairing?

Looking ahead to early next week for the Pound, the data calendar is set to remain relatively light. Because of this, Sterling is likely to remain vulnerable to shifts in market mood.

As an increasingly risk-sensitive currency, a shift to bearish trade could weigh on Sterling. However, bullish trade may bring boons against safer assets.

Continued analysis of the Bank of England’s next moves could underpin GBP, as expectations may remain for further tightening.

For the US Dollar, data is similarly lacking. Because of this, the safe-haven ‘Greenback’ may rely on market dynamics to shape rates.

John Mulcahey

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