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GBP/USD Struggles to Hold Weekly Highs as US Jobs Data Beats Forecasts

Last week’s high: $1.3017

Last week’s low: $1.2798

US Non-Farm Payrolls Support US Dollar, as Sterling Bolstered by Brexit Speculation

All in all, the Pound to US Dollar exchange rate didn’t see much change in value throughout the last week. The US Dollar easily climbed against a Brexit-battered Pound in the first half of the week, before optimism rose once again and the Pound to US Dollar exchange rate recovered its weekly losses.

Demand for the US Dollar was fairly steady throughout the week, as investors continued to seek out safe haven currencies amid worsening US-China trade tensions. Concerns that US trade relations with allies like Canada and Japan could also worsen only made the US Dollar more appealing.

However, Sterling saw a surge in demand at the end of the week, as EU Chief Negotiator Michel Barnier expressed optimism about UK-EU negotiations and reminded investors that the EU was also hoping to avoid a ‘no-deal Brexit’ scenario.

He said the EU was also willing to look at alternative solutions to resolving the Irish border issue.

The US Dollar was able to hold above its weekly lows versus the Pound though, as the latest US Non-Farm Payrolls report saw more new jobs created in August than expected.

USD Outlook: US Inflation Data and Bank of England News Ahead

Next week’s US economic calendar won’t be as busy and there will be plenty of UK data, but the Pound to US Dollar exchange rate is still more likely to be most influenced by Brexit developments and safe haven demand throughout the week.

If there are any further developments in Brexit negotiations, particularly regarding how likely a UK-EU deal is to be reached or how willing negotiators are to make concessions, the Pound is likely to be heavily influenced.

Meanwhile, the US Dollar will remain appealing for investors seeking safe haven currencies if US trade protectionism or tensions worsen.

The biggest event next week will be Thursday’s Bank of England (BoE) policy decision. If the bank takes a surprisingly hawkish tone regarding monetary policy or indicates that BoE Governor Carney could stay on as Governor for longer, the Pound will strengthen.

As for data, Britain’s growth stats on Monday and wage results on Tuesday could prove influential. The biggest data for US Dollar investors next week will be Thursday’s US Consumer Price Index (CPI) inflation report.

 

Key Events

10th September

09:30 UK Trade Balance

09:30 UK Growth Rate

09:30 UK Industrial and Manufacturing Production

11th September

09:30 UK Job Market Report

13th September

12:00 Bank of England Policy Decision

13:30 US Inflation Rate

13:30 US Retail Sales

13:30 US Import and Export Prices

14:15 US Industrial and Manufacturing Production

15:00 US Michigan Consumer Sentiment

 

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

Arron Morris
Senior Currency Broker
T: 01442 892 065

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