Pound US Dollar (GBP/USD) exchange rate wavers ahead of US jobs data
The Pound US Dollar (GBP/USD) exchange rate is trading narrowly this morning, as markets await the latest US non farm payrolls data.
At the time of writing, GBP/USD is trading at around US$1.2832, showing little movement from the morning’s opening levels.
US Dollar (USD) tempered as markets await US labour data
The US Dollar (USD) is struggling to find its footing thus far this morning, as investors await the latest US jobs data.
This afternoon, February’s non farm payrolls data is due to be released, and is expected to show a clear fall in created jobs.
With the US labour market in focus recently amid signs of cooldown, this figure could weaken USD later on.
Additionally, the ‘Greenback’ is softening this morning as markets continue to dissect Federal Reserve Chair Jerome Powell’s dovish comments.
Richard Hunter, Head of Markets at interactive investor, commented that:
‘The Fed stands prepared to reduce interest rates this year when circumstances dictate, and implied that such a move is not far away, even though there is no immediate rush to ease monetary policy in light of consistently favourable economic data.’
With this in mind, markets now estimate around a 75% chance of rate cuts beginning in June, according to CME’s FedWatch tool.
Pound (GBP) muddled amid lack of economic data
The Pound (GBP) is wavering this morning, as a lack of impactful data saps sentiment towards Sterling.
However, owing to a cheery market mood, the increasingly risk-sensitive Pound is able to remain afloat against safer assets.
Yet, continued analysis of the recent Spring Budget is likely serving to temper Sterling’s appeal. The accompanying forecasts from the Office of Budget Responsibility (OBR) indicated that the measures may contribute little to the UK’s economic growth.
Due to a lack of impactful growth-prompting initiatives, analysts believe the UK will likely remain struggling. Economic output looks set to remain stagnant, despite falling inflation and interest rate cuts on the horizon.
Pound US Dollar exchange rate forecast: UK wage data in focus
Looking ahead to early next week for the Pound, the core catalyst of movement is likely to be the latest UK labour data.
Due to print on Tuesday, economists are expecting the unemployment rate for January to have held at 3.8%. If this expectation is accurate, Sterling could strengthen amid signs of robust employment levels.
Additionally, the latest wage growth data is due for publication at the same time. Average earnings excluding bonuses are expected to have increased in the three months leading to January, which may lift GBP.
For the US Dollar, the latest batch of inflation data is due for release on Tuesday. Economists forecast core inflation will have cooled in February, while headline inflation is expected to have held at 3.1%.
As the headline rate could suggest sticky inflation, the ‘Greenback’ could gain ground amid fading interest rate cut bets.