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GBP/USD Forecast: Can Sterling Rally on UK Jobs Data?

Last week’s high: $1.3357

Last week’s low: $1.3115

GBP/USD Losses Down to Brexit Worries and Trump Warning

The Pound traded poorly against the US Dollar last week; GBP/USD exchange rate losses started with the surprise resignation of Brexit Secretary David Davis and Foreign Secretary Boris Johnson.

Both men resigned in opposition to the government’s Brexit plans, specifically a white paper which pointed towards a ‘soft Brexit’ deal.

The week ended on another GBP-damaging bombshell when US President Donald Trump suggested that ‘Soft Brexit’ would prevent a UK-US trade deal being made. Mr Trump later reined in this statement.

Over in the US, the Dollar was boosted by rising inflation; this raised hopes that there could be another near-term Federal Reserve interest rate hike.

USD Outlook: Volatility ahead on Earnings Stats

This week might see the Pound recover against the US Dollar, depending on how UK jobs market stats print.

The main events will be UK unemployment and earnings data on Tuesday, followed by inflation data on Wednesday.

A forecast-matching rise in UK wage growth could push GBP/USD higher, as along with higher inflation this would increase the odds of a 2018 Bank of England (BoE) interest rate hike.

The unemployment rate is expected to remain at 4.2%; a surprise reduction could further support Sterling.

The biggest US event this week will be two-day testimony from Federal Reserve Chair Jerome Powell – Mr Powell could cause a USD exchange rate rally if he supports more interest rate hikes this year.

Key Events

17th July

09:30 UK Unemployment Rate

09:30 UK Average Earnings

15:00 US Fed Chair Powell Testimony

18th July

09:30 UK Inflation Rate

15:00 US Fed Chair Powell Testimony

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To keep up to date with the US Dollar, visit the USD blog in our Currency News section.

Arron Morris
Currency Trader
T: 01442 892 065

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