Pound US Dollar (GBP/USD) Exchange Rate Dented by Labour Data
The Pound US Dollar (GBP/USD) exchange rate is down this morning as UK jobs data weighs heavily on the Pound (GBP).
At the time of writing the GBP/USD exchange rate is trading at $1.2157, down 0.4% from this morning’s opening rate.
Pound (GBP) Stumbles following UK Jobs Data
The Pound faces heavy selling pressure this morning following key employment data releases.
The UK’s average earnings (excluding bonuses) for June through to August came in as expected, slightly dipping to 7.8% from the upwardly revised previous reading of 7.9%. The marginal decrease in average earnings has impacted Bank of England (BoE) rate hike bets, which have plummeted this morning as investors speculate about another rate hold, denting the Pound.
Emma Mogford, Fund Manager at Premier Miton Monthly Income Fund, commented:
‘With the number of employees on payroll falling and wage inflation below expectations, this gives the Bank of England more reason to pause its interest rate increases.
‘If we are at peak rates, then a more stable outlook for interest rates could help the economy and stock market.’
While this pullback in BoE rate hike bets weighs on GBP, so do signs of a loosening labour market.
US Dollar (USD) Fluctuates Ahead of Retail Data
The US Dollar (USD) is mixed this morning ahead of key US data releases later today.
As ongoing conflict in the Middle East continues to spook global markets, investors are being driven towards safe-haven currencies, supporting USD.
However, the US Dollar’s potential gains appear limited so far, as USD investors brace for potentially disappointing September retail sales data, which may dent Federal Reserve rate hike bets later today.
Recent commentary from the central bank’s policymakers has also fuelled speculation that the Fed is done raising rates. For instance, Fed official Patrick Harker affirmed in a speech yesterday:
‘We should not at this point be thinking about any increases’.
Amid receding inflationary pressures, suggestions of an end to the Fed’s rate hiking cycle leave the US Dollar somewhat subdued today ahead of further core data releases. However, the US Dollar is finding success against the falling Pound.
Pound US Dollar Forecast: Jobs Data to Boost GBP?
Later today, the US retail sales data for September could dent the ‘Greenback’. Figures are forecast to dip, indicating a slowing US retail sector and a decrease in consumer spending, suggesting a slight cooling in the US economy.
Also due later today is US industrial production data. After a series of upbeat reports in this sector in recent months, industrial production is expected to take a hit today, which could potentially cause USD to stumble.
If retail sales and industrial production both indicate weaker economic activity, it may encourage the Fed to leave interest rates unchanged again at its next meeting.
The UK’s latest consumer price index is also due for release tomorrow, with economists expecting a slight cooling of UK inflation. This could lead investors to rethink their current BoE rate hike bets and lower GBP exchange rates.