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Pound US dollar exchange rate retreats back below $1.30 on strong US payroll figures

currency-newsPound US dollar exchange rate retreats back below $1.30 on strong US payroll figures
The pound closed last week by consolidating Thursday’s gains, edging off its best levels against the US dollar in the wake of a consensus-smashing US payroll release.

Sterling appears buoyant again at the start of this week however, as GBP/EUR ticks up to €1.1411, GBP/USD rises to $1.3001 and GBP/CAD stabilises at C$1.7037. At the same time GBP/AUD and GBP/NZD are holding steady at AU$1.8044 and NZ$1.9521 respectively.

Looking ahead, the US will publish its latest non-manufacturing PMI this afternoon, with the US dollar likely to gain if October’s reading prints close to the record growth seen in September.

What’s been happening?

After soaring higher on Thursday, the pound took a bit of a breather at the end of last week.

This was partly down to a slight correction and profit taking in GBP following its dramatic surge, but also due to the release of the UK’s latest construction PMI.

While the headline figures showed that the UK construction industry enjoyed stronger-than-expected growth last month, it was offset by a warning that weak fundamentals could see the sector contract in the fourth quarter.

This lethargic end to the week for Sterling left the GBP/EUR exchange rate to tread water on Friday, despite data showing growth in the Eurozone’s manufacturing sector slowed to a 26-month low in October.

Meanwhile the GBP/USD exchange rate briefly climbed to $1.30 on Friday, before falling back by the end of the session as a larger-than-expected increase in US payroll figures aided a recovery in the US dollar.

What’s coming up?

The main focus for traders at the start of this week’s session will likely the US service sector as investors look to the latest ISM non-manufacturing PMI to see how the sector fared last month after recording record growth in September.

However with the US mid-terms looming it remains unclear just how much impact US economic news will have on the US dollar over the next few days.

Meanwhile the UK will publish its own services PMI this morning, with the pound potentially firming if growth in Britain’s largest wealth generating sector shows any notable improvement in October.

Finally EUR investors will be looking out for the latest German industrial data this week, with an expected contraction in factory orders and industrial production in September potentially weakening expectations for the country’s upcoming GDP figures.
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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