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GBP/USD to Strengthen amid Signs of US Labour Market Slack?

Stack of US Dollar banknotes

Pound US Dollar (GBP/USD) Exchange Rate Stagnant amid Lack of Data

The Pound US Dollar (GBP/USD) exchange rate is trading narrowly today, as a lack of data limits the Pound’s upside.

At the time of writing, GBP/USD is trading at around US$1.2146, showing little movement from the morning’s opening rates.

GBP to Remain Static amid Light Data Calendar?

Over today’s trade, the Pound (GBP) has struggled to attract clear support from investors, and has broadly trended lower against its peers.

Due to a lack of other data catalysts, investors have turned to analysis of the recent services PMI. While it showed the key sector hadn’t slowed as much as first thought, the accompanying report suggested that hiring had slowed, and inflationary pressures were beginning to ease.

Because of this, GBP investors appeared to pare back their bets on further tightening from the Bank of England (BoE). The consensus is that the BoE have reached the peak of their current interest rate hiking cycle.

Looking ahead, the data calendar remains similarly bare through to the end of the week. As such, Sterling is unlikely to find a clear path forward as there remains very little for investors to buy into.

Additionally, it leaves the increasingly risk sensitive Pound vulnerable to shifts in risk appetite. Bearish trading conditions could weaken GBP rates against safer assets.

USD to Weaken amid Signs of Cooling Labour Market?

Over the course of today’s session, the US Dollar (USD) has seen muted trade. While the ‘Greenback’ initially consolidated recent gains, markets moved to reprice USD rates as it entered into overbought conditions.

This was then furthered by an uptick in initial jobless claims. In tandem with recent labour data, it fuelled perceptions of growing slack in the US labour market and further capped USD.

The market mood also played a role in shaping USD today, as it shifted between bullish and bearish trade. Because of this, the safe-haven currency appeared unable to gain a clear foothold against its peers.

Looking ahead to tomorrow, the core catalyst of movement is likely to be September’s non farm payrolls data. Economists anticipate that the number of jobs created will have fallen on a monthly basis, from 187,000 to 170,000.

If this prints accurately, it could further fuel perceptions of growing looseness in the US jobs market. This could weigh heavily on the US Dollar, and lead to investors paring back any remaining bets on further tightening from the Federal Reserve.

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