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Pound US Dollar Exchange Rate to Stumble on Robust US Payroll Print?

Pound US Dollar

Pound US Dollar Exchange Rate Steady ahead of US Payroll Release 

The Pound US Dollar (GBP/USD) exchange rate is rangebound so far this morning as market await the publication of the latest US payroll figures later this afternoon. 

At the time of writing the GBP/USD exchange rate is trading at around $1.3598, virtually unchanged from today’s opening rate. 

US Dollar (USD) to Jump if Upbeat Payrolls to Confirm Fed Tapering Plans 

The US Dollar (USD) looks poised to accelerate later today, with the release of the last US non-farm payroll report before the Federal Reserve’s November policy meeting. 

Economists are forecasting the US economy will have added 500,000 new jobs last month, a notable improvement on the disappointing 235,000 added in August. 

Most importantly this is likely to be enough to pass the low bar set by Fed chair Jerome Powell, that even a moderate improvement in employment growth will be enough for the US central bank to press ahead with its plans to begin tapering its asset purchases by the end of the year. 

Analysts at Danske Bank suggest: 

‘After the weak August report, focus will be on whether employment growth accelerated after higher benefits expired or whether more deeper running issues (i.e. supply problems or slowing demand?) are holding back jobs growth. In our view, new jobs around 300K or above will be enough for the Fed to go ahead with tapering.’ 

Of course, should September’s payrolls print disappoint, then this is likely to raise some doubts over the tapering plan and could cause the US Dollar to tumble later this afternoon. 

Pound (GBP) Sidelined by Fresh Brexit Tensions 

At the same time, the Pound (GBP) is currently muted amidst renewed Brexit tensions, amidst a row between the UK and France over fishing rights. 

This comes as France threatens to take drastic action over relatively low number of licenses granted by the UK to French boats with historical claims to fish in British waters. 

French Prime Minister Jean Castex has accused the UK of ignoring the agreements it signed as part of the Brexit deal late last year. 

Castex said: 

‘Britain does not respect its own signature. Month after month, the UK presents new conditions and delays giving definitive licenses… this cannot be tolerated.’ 

GBP investors are particularly concerned by France’s threat to cut its energy supply to the UK, which could exacerbate concerns over a possible shortage this winter.