GBP/USD Exchange Rate Dips ahead of US Payrolls
The Pound US Dollar (GBP/USD) exchange rate is rangebound this morning ahead of US non farm payroll figures scheduled to be released this afternoon.
At the time of writing, the Pound US Dollar exchange rate is trading at around $1.3280 and is lacking direction.
US Dollar (USD) Climbs ahead of US Payrolls
The US Dollar (USD) is rising against the majority of its peers this morning ahead of the highly influential non farm payrolls.
The non farm payrolls are expected to show 550K jobs were added to the US economy in November, up from October’s 531K.November’s US unemployment rate is forecast to decrease from 4.6% to 4.5% which suggests further improvement in the job market for a second month, predicting the lowest percentage since the pandemic began in March 2020.
Michael Hewson, chief market analyst at CMC Markets UK, said:
‘The October payrolls report helped to reaffirm the Federal Reserve’s decision a few days before to set the ball rolling on tapering its $120bn a month asset purchase program.’
Thus, further progress predicted in the November data will provide additional support to the US economy and support the case for the Federal Reserve to accelerate tapering its bond-buying programme and raise interest rates.
Moreover, earlier in the week, Jerome Powell, Federal Reserve Chair, delivered surprise hawkish comments which have spurred on expectations of tightening monetary policy.
Pound (GBP) Slips amid Omicron Uncertainty
The Pound (GBP) is falling this morning as the newly-identified coronavirus strain, Omicron, continues to dampen Sterling’s appeal.
Despite the UK government securing an investment of £100M into Omicron vaccine research and manufacturing, GBP investors are cautious, causing downside pressure on the Pound.
Furthermore, GBP will be hindered today by the lack of data scheduled to be released.
This morning, the final November PMI data for the service sector printed marginally less than forecast at 58.5. However, the reading is still above the 50 mark and shows strong growth.
These figures indicate that new businesses have been shown support from consumer spending; this has instigated a rise in employment for the ninth successive month.
However employers are struggling to fill vacancies with appropriate candidates, causing the slowest employment rate growth since June. As well as this, business optimism dropped to a one-year low.
On the other hand, the Pound US Dollar may be affected later this morning by a speech from Bank of England (BoE) policymaker, Michael Saunders, as uncertainty whether the central bank will raise interest rates at its December policy meeting continues to drive GBP movement.