Update: GBP/USD Exchange Rate Slumps in Wake of Impressive US Labour Figures
The Pound US Dollar (GBP/USD) exchange rate plummeted to a new three-month low this afternoon following the release of the latest US labour figures.
While payroll figures came in below expectations, the USD exchange rate was still able to surge higher on the back of a larger-than-expected fall in the domestic unemployment rate as it fell from 4.1% to 3.9% in April, its lowest level since 2000.
However the accompanying wage growth figures proved to be significantly more subdued last month, helping to prevent the GBP/USD exchange rate from falling too heavily.
Original article continues below:
GBP/USD Exchange Rate Expected to Slide with the Release of Robust US Payroll Figures
Markets are bracing for a possible slump in the Pound US Dollar (GBP/USD) exchange rate this morning as they await the release of the latest US employment data later this afternoon.
At the time of writing the GBP/USD exchange rate is trading narrowly, with the pairing holding close to a four-month low.
US Dollar (USD) Exchange Rate to Jump on Robust Payroll Figures?
The US Dollar (USD) is expected to continue to punch higher against the Pound (GBP) with the publication of the latest US non-farm payroll figures.
Economists forecast that 192,000 workers will have been added to US payrolls in April, rebounding from a fall to 103,000 in March, with the jump in payrolls even possibly prompting the unemployment rate to fall below a 17-year low of 4.1%
However it may be the accompanying wage growth figures which draw the most attention from investors as an uptick in wages is expected to bolster the case for the Federal Reserve to pursue a more aggressive path of monetary tightening, likely bolstering the USD/GBP exchange rate.
Vishnu Varathan, analyst at Mizuho bank said;
‘A further pick-up in the pace of wage gains could be the ‘smoking gun’ for the Fed to express any shift away from ‘roughly balanced’ risks to inflation.’
Meanwhile the Pound remains on the back foot this morning in the wake of this week’s lacklustre UK PMI data, with economists expressing concerns that the UK economy currently looks on track to only expand 0.2% in the second quarter.
GBP/USD Exchange Rate Forecast: Delay to BoE Rate Hike to Leave Sterling on the Defensive?
Looking past today’s payroll figures to next week’s session the GBP/USD exchange rate is expected to remain on the defensive as the Bank of England hold its latest policy meeting.
With hopes of a rate hike from the BoE this month being scuppered by a run of soft UK data and some cautious remarks from Governor Mark Carney, the Pound (GBP) is likely to find itself being largely shunned by markets.
Meanwhile the US Dollar may continue to March higher next week as economists forecast US inflation will be shown to have climbed again in April, something will may apply more pressure on the Fed to speed up the pace of its rate hikes this year.
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