The Pound to US Dollar (GBP/USD) exchange rate tumbled sharply to an 11-month low on Friday as Nonfarm Payrolls data came in stronger than forecast in September, adding pressure on the Federal Reserve to raise interest rates.
According to the Washington based Labour Department, the US economy created 248,000 new jobs last month, a figure that was better than the 215,000 forecast by economists and was a leap from the revised August figure of 180,000.
Unemployment in the world’s largest economy fell to its lowest level since the summer of 2008 after the jobless rate declined from 6.1% to 5.9% as the nation’s companies increased their pace of labour hiring. Economists had been widely expecting the unemployment rate to remain unchanged.
The strong report caused economists to raise expectations that the Federal Reserve will raise interest rates early next year.
‘After this robust number, and decent upward revisions for both July and August, the hawks will once again be circling. Policymakers will also be encouraged by the fall in the number of discouraged workers. More people are starting to believe in the economy and that matters a lot,’ said Marcus Bullus, trading director of MB Capital.
Also adding to the good news for the US economy was the release of a separate report, which showed that the nation’s trade deficit narrowed to $40.10 billion in August, a drop from the revised August figure of $40.30 billion.
Analysts had forecast for the deficit to widen to $40.90 billion. The trade gap is the smallest since January.
The GBP/USD Exchange Rate fell as Low as 1.599
Sterling was weighed upon by data released earlier in the session, which showed that activity in the UK’s dominant services sector slowed to a three-month low last month, raising concerns that the UK economy is not yet strong enough to warrant an interest rate rise.
Markit’s U.K. services PMI slipped to 58.7 in September from a reading of 60.5 the previous month. Analysts had expected the index to tick down to 59.1 last month.
US Dollar Surges against Peers, More Gains Forecast
Against the Japanese Yen and Swiss Franc the US Dollar soared to a fresh 14-month high. Against the Australian and New Zealand Dollars, the currency advanced strongly and against the Canadian Dollar the ‘Greenback’ rose to a new six-month high of 1.122.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6255 ,
US Dollar,,Euro,0.7985 ,
US Dollar,,Canadian Dollar,1.1236 ,
US Dollar,,Australian Dollar,1.1519 ,
Pound Sterling,,US Dollar,1.5983 ,
Euro,,US Dollar,1.2519 ,
[/table]
