Although today’s US non-farm payrolls and unemployment rate reports are likely to be the main drivers of currency market volatility, the Pound experienced movement this morning as a result of surprising UK public finances data.
The Pound Sterling to US Dollar Exchange Rate was in the region of 1.6124 as of 10:20 GMT.
As European trading got underway Sterling was hovering close to a three-week high against the US Dollar and was little changed against the Euro, with the British asset deriving support from the expectation that the public finances data would reveal that the UK’s budget deficit contracted in September, year-on-year.
The GBP/EUR pairing hit a high of 1.1821
The Pound experienced modest fluctuations as the report showed that the deficit narrowed by more than expected, with net borrowing (excluding temporary bank support) dropping from 12.1 billion Pounds in September 2012 to 11.1 billion Pounds in the same period of 2013.
Economists had expected a shortfall of 11.3 billion Pounds.
The report also showed that net borrowing in the six months through September dipped from 62.6 billion Pounds to 56.7 billion Pounds.
Meanwhile, spending advanced by 2.5 per cent and tax receipts climbed by 7 per cent.
Before the data was published IHS Global Insight economist Howard Archer commented; ‘Evidence of decent economic activity increases the Chancellor’s chances of undershooting his fiscal targets even allowing for the fact that there may be a lagged impact of stronger growth on the public finances’.
1 US Dollar is currently worth 0.6201 pence
However, the Pound went on to soften against its North American rival as the US Dollar recovered losses ahead of the release of US employment data.
Economists have forecast that the non-farm payrolls report (whose publication was delayed due to the Federal shutdown) will show that the US economy added more positions in September than August. However, if the report fails to reach forecasts and if the US unemployment rate holds at 7.3 per cent, above the Fed target, the ‘Buck’ could soften and the GBP/USD pairing could post gains during North American trading.
While the UK’s big economic news – third quarter GDP – won’t be announced until Friday, the publication of minutes from the latest Bank of England meeting will also be influential.
BoE Governor Mark Carney’s speech in London is another event worth noting.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6124 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1796 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.6704 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9090 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6201 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8477 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5985 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5239 >
(As of 10:20 GMT)
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