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GBP/USD Recovers Almost Two Cents on Brexit Deal Speculation

Last week’s high: $1.3036

Last week’s low: $1.2699

Strong US Jobs Data Knocks GBP/USD from Weekly Peak

Towards the end of last week, investors bought into the Pound en masse after a report emerged claiming that the UK and EU had largely agreed on arrangements for future financial services relationships. As the future of UK financial services had been one of the primary concerns of markets since the Brexit process began, the possibility of this report being accurate was a big relief to Pound traders.

Sterling was further supported by a surprisingly hawkish Bank of England (BoE) on Thursday. As the US Dollar was sold off amid lighter market demand for safe haven currencies, the Pound to US Dollar exchange rate easily registered significant gains.

However, towards the end of Friday’s session investors sold GBP/USD from its best levels as the key US Non-Farm Payroll report rounded off a week of strong data for the US Dollar.

Coming in well above the forecast improvement of 190k, the change in Non-Farm Payrolls figure came in at an impressive 250k, showing that US job growth was still trending strongly. The unemployment rate remained at 3.7% as expected.

USD Outlook: Major Week for US Dollar in Terms of Politics and Data

Unless there are any new major Brexit developments in the coming week, the US Dollar is more likely to be the primary cause of Pound to US Dollar exchange rate movement amid a major week for US data and political news.

Monday will see the publication of ISM’s key US non-manufacturing PMI, and Tuesday is the date of the US 2018 Mid-Term Elections. Throughout the day, citizens will be voting in local elections for the US Congress. Depending on how the elections go, they may have an impact on US President Donald Trump’s fiscal policy plans which could influence the USD outlook.

Towards the end of the week there will be even more for US Dollar investors to react to, including the Federal Reserve’s November policy decision on Thursday.

UK services PMI data and growth projections could influence the Pound’s strength, but any potential major developments in UK-EU Brexit negotiations would have a much greater impact on the Pound to US Dollar exchange rate.


Key Events

5th November

09:30 UK Services and Composite PMI

15:00 US Non-Manufacturing PMI

6th November

US Mid-Term Elections

15:00 US JOLTs Job Openings

8th November

19:00 Federal Reserve Policy Decision

9th November

09:30 UK Trade Balance

09:30 UK Growth Rate

09:30 UK Manufacturing and Industrial Production

09:30 UK Business Investment

15:00 US Michigan Consumer Sentiment

15:00 US Wholesale Inventories


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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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