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Pound US Dollar Exchange Rate Firms as Markets Brace for US Non-Farm Payrolls

Pound US Dollar Currency Forecast

The Pound US Dollar (GBP/USD) exchange rate has been steadily rising this morning as the Pound continues to hold on to its gains following better-than-expected PMI’s released yesterday morning.

At the time of writing the GBP/USD pairing are trading around the $1.4213 level as markets await the latest US Non-Farm payrolls this afternoon.

Pound (GBP) Supported by UK PMI Data

The Pound has found itself firmly supported against the US Dollar this morning as Sterling continues to find support in the most recent PMI’s from the UK.

Whilst yesterday sat the fastest growth output in the services sector in almost a quarter of a decade, this morning has seen the release of a more positive construction PMI.

The construction PMI data for May has shown that the UK construction sector has remained strong, with output growth reaching its strongest level since 2014.

Tim Moore, Economics Director at IHS Markit, commented on the latest PMI saying:

‘UK construction companies reported another month of rapid output growth amid a surge in residential work and the fastest rise in commercial building since August 2007.’

‘Total new orders increased at the strongest rate since the survey began more than two decades ago, but supply chains once again struggled to keep pace with the rebound in demand.’

US Dollar Mixed as Markets Await US Non-Farm Payrolls

The US Dollar has been trading in a mixed range this morning as markets brace for the latest US non-farm payrolls for May.

Forecasts expect around 650,000 new hires during May, up from 266,000 the month previous. A jump in employment would support the US Dollar.

However a larger-than-expected increase could cause markets to become jittery over a spike in inflation in the country.

Ricardo Evangelista, senior analyst at ActivTrades, explains:

‘The narrative in the markets has been dominated by the risk of high inflation becoming a collateral effect of the ongoing gargantuan stimulus.’

‘The Fed has, so far, refused to blink, insisting that any spikes in prices are likely to be temporary and that bringing forward the tapering could damage the economic recovery.’

Pound US Dollar Exchange Rate Outlook: Coronavirus Developments in Focus

Heading into the weekend, Pound investors will be keeping an eye on any coronavirus developments in the coming days.

Any indication that the Indian variant of the virus will derail the UK’s roadmap out of lockdown could cause Sterling to stumble.

US Dollar traders will be keeping an eye on the global market mood over the weekend, a worry over rising inflation could see investors head towards safe-haven currencies like the ‘Greenback.’

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