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USD investors await labour figures, UK construction sector growth expected to slow

business-articlesUSD investors await labour figures, UK construction sector growth expected to slow
  • Dip in construction PMI may weaken GBP.
  • US non-farm payrolls expected to rise.
  • US jobless rate forecast to remain at 17-year low.
UK construction PMI expected to drift lower

The pound may trend a little lower this morning as the UK publishes its latest construction PMI.

Analysts predict that the index will have dipped from 52.2 to 52.0 in January as demand continues to fall.

It is expected that the slowdown at the start of this year will continue to be driven by a decline in commercial construction projects as Brexit uncertainty prompts many firms to shy away from making further commitments in the UK.

However with the construction sector only accounting for a relatively small portion of the UK’s economic growth today’s data may prove to have only a negligible impact on Sterling.

Economists predict US payroll numbers will rise

All eyes will be on the US this afternoon as the country publishes its latest non-farm payroll figures.

After adding just 148,000 jobs in December, economists forecast the number of people finding work in the US in January will have risen to a more robust 180,000.

The uptick is likely to be welcomed by investors as yet another sign that the US economy is expanding at a healthy clip.

Whether this will be enough for the US dollar to strengthen given the recent market aversion remains to be seen however.

Change in Unemployment may impact USD

While the payroll figures are generally the preferred measure of how employment in faring in the US, the accompanying unemployment statistics can also impact the US dollar, especially if there is some divergence.

While the US dollar is likely to strengthen if the payroll figures come in as expected, any rise could still be undermined if the unemployment rate unexpectedly rises in January, especially due to markets becoming increasingly sensitive to downside risks when trading USD.

Economists currently forecast the US jobless rate will remain unchanged for the fourth consecutive month in January, holding at a 17-year low of 4.1%.

Upcoming Data

Thursday, 1 February, 2018
09:30                     GBP Construction PMI   
13:30                     USD Non-Farm Payrolls 
13:30                     USD Unemployment Rate
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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