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Pound US Dollar (GBP/USD) Exchange Rate to Fall on US Employment Data?

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Pound US Dollar (GBP/USD) Exchange Rate Underpinned by Risk-Positive Trade

The Pound US Dollar (GBP/USD) exchange rate slipped this morning, after rising overnight, though it remains near one-month highs. A risk-on mood is underpinning the Pound (GBP) and weighing on the US Dollar (USD), although a lack of data limits movement.

Pound (GBP) Driven by Politics?

The Pound is enjoying a risk-on market mood today, which is boosting the riskier currency over its safe-haven counterpart, the US Dollar. As China lifts lockdown restrictions in Beijing and Shanghai, investors are hopeful that the world’s second-largest economy will see renewed growth.

Amid a lack of data during today’s session, movement in Sterling may be limited. Risk sentiment is likely to remain the dominant factor in GBP/USD.

Looking further ahead, it could be a quiet week for the Pound overall. There is very little economic data before the Platinum Jubilee bank holiday weekend begins on Thursday.

GBP exchange rates could be influenced by UK political events. Last week was rather tumultuous for British politics. Sue Gray published her damning report into illegal parties at 10 Downing Street and Chancellor Rishi Sunak unveiled a £15bn cost-of-living support package.

Both of these events could continue to affect the Pound through this week’s trade. Is the ‘partygate’ scandal over, or will we see Boris Johnson come under fire again?

US Dollar (USD) to Rally on Strong Jobs Data?

Meanwhile, the US Dollar continues its recent bearish trend. With markets reining in Federal Reserve rate hike bets and risk sentiment improving, USD has suffered in recent weeks.

A speech from Fed policymaker Christopher Waller this afternoon could affect the ‘Greenback’. Amid speculation that the Fed could pause its tightening cycle in September, markets may be particularly sensitive to comments.

Turning to tomorrow, the latest US consumer confidence results will be in focus. Economists expect a decline in morale, which may weigh on USD.

In the latter part of the week we have a handful of high-impact releases, including the latest labour market data and the ISM PMIs. The jobs reports are set to be positive, which may give the US Dollar a much-needed boost.

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