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GBP/USD Exchange Rate Rangebound as US Payrolls Fall Short of Expectations

Pound US Dollar Currency Forecast

GBP/USD Exchange Rate Muted Following Disappointed US Payroll Report

The Pound US Dollar (GBP/USD) exchange rate is stuck in a narrow range this afternoon after US payrolls missed market expectations.

At the time of writing the GBP/USD exchange rate is trading at around $1.3070, virtually unchanged from today’s opening rate.

US Dollar (USD) Stalls on Underwhelming Payroll Report

The US Dollar (USD) is struggling to find support this afternoon after the highly influential US non-farm payrolls printed below expectations in December.

The US Bureau of Labor Statistics reported payrolls rose by 145,000 in December, down from a bumper reading of 266,000 in November and missing forecasts of an expansion of 164,000.

However potentially more worrying for USD investors will be the accompanying earnings figures, which reported annualised wage growth slowed to just 2.9% last month, its weakest levels in over a year.

Pound (GBP) Undermined by Additional Dovish Remarks from the BoE

Meanwhile, after being sent lower on Thursday after the Bank of England’s (BoE) Mark Carney hinted at possible rate cut in the near future, the Pound (GBP) is facing further pressure today following some dovish comments from another member of the BoE’s policy team.

Speaking in London, Silvana Tenreyro suggested risks remain tilted to the downside and that the UK’s labour market is ‘unlikely to tighten further’.   

Tenreyro added:

‘If uncertainty over the future trading arrangement or subdued global growth continued to weigh on UK demand then my inclination is towards voting for a cut in bank rate in the near term.’

Carney and Tenreyro’s comments have sharply increased market expectations for a rate cut in the first half of 2020, with May’s policy meeting seen as the most likely timing for the cut.

GBP/USD Exchange Rate Forecast: Rebound in Inflation to Lift Sterling Next Week?

Looking ahead to next week’s session, the Pound US Dollar (GBP/USD) exchange rate may find some support with the publication of the UK’s consumer price index.

Should this show that UK inflation accelerated in December, it may help to ease speculation of an imminent rate cut from the Bank of England (BoE) and help to buoy Sterling sentiment.

Meanwhile, the US will publish its own CPI figures next week, with a robust inflation reading likely to be supportive of the US Dollar.