Pound US Dollar (GBP/USD) Exchange Rate Subdued as Markets Brace for American Employment Reports
The Pound US Dollar (GBP/USD) exchange rate is muted today as the ‘Greenback’ retains yesterday’s gains ahead of fresh US jobs data this afternoon.
Currently, GBP/USD is trading at $1.1839, marginally up from an overnight low but still two cents down from yesterday’s opening level.
US Dollar (USD) to Jump Again on Strong Jobs Data?
The US Dollar (USD) is holding strong today, as tailwinds following yesterday’s hawkish testimony from Federal Reserve Chair Jerome Powell continue to underpin the currency.
The Fed chief signalled that the US central bank could increase the pace of its interest rate rises in response to hotter-than-expected US economic data, and the subsequent leap in rate hike bets is keeping USD afloat today.
USD investors are now eagerly awaiting the latest American employment data due out this afternoon. First up is the ADP employment change figure, with economists expecting to see an acceleration in US employment.
Later we have the JOLTs job openings data for January. Forecasters predict the report to show that vacancies remain historically high.
Together, these releases could suggest that the US labour market remains strong and tight, implying economic resilience and potential upward pressure on wage inflation. This would likely boost Fed rate hike bets, lifting the US Dollar even higher.
More US employment data is due out on Friday – the all-important non-farm payrolls report. Another robust reading could put more wind in USD’s sails.
Pound (GBP) Muted as Investors Await Friday’s GDP Data
Meanwhile, the Pound (GBP) is rudderless today amid an ongoing lack of UK economic data. Against the ‘Greenback’, Sterling is languishing at a four-month low without much chance of regaining ground.
GBP/USD is likely to be driven by Dollar dynamics through until the end of the week when UK GDP is out. Analysts forecast a modest recovery of 0.1% in the UK economy in January, following December’s 0.5% downturn.
Even this marginal expansion could lend Sterling some support, as it would help to ease fears over the prospect of a UK recession.
However, with high-impact US data also due out on Friday, GBP/USD could end the week on a sour note.