Sterling gains on jobs data

16th September 2010
Good morning. Sterling recovered yesterday throughout the day, rising against most currencies. This morning rates at 08:30am are as follows:

  • GBP/EUR 1.1986
  • GBP/USD 1.5613
  • GBP/AUD 1.6641
  • GBP/NZD 2.1461
  • GBP/CAD 1.5998
  • GBP/CHF 1.5625
  • GBP/ZAR 11.043
  • GBP/JPY 133.31
  • GBP/NOK 9.4981
  • EUR/USD 1.3024

Sterling gains on employment data

Sterling rose as the market focused on an increase in employment. Initially the figures showed that there was an increase in jobless claims, which pushed Sterling lower. It didn’t last long though as markets focused on the increase in jobs in total, taking the figures as a sign that the economy is still growing, albeit very slowly.

Market participants said a speech by Bank of England Governor Mervyn King gave no hints that more quantitative easing was coming soon to help the fragile economy, and offered a chance for investors who have been short on the pound to trim those positions.

Traders said UK banks were seen constantly buying the pound, particularly against the dollar, helping to push it higher in late London trade

What will happen with rates going forward?

Most analysts think that we now won’t see further gains for the pound until we see further signs the economy is recovering. Today’s Data (See below) shows what we expect today, and how this may affect rates.

Today’s Data

Retail Sales from the UK will show how confidence consumers are about the economy. Sales are used as a measure of the economy as a whole. Year on Year, we expect a 2% gain, and a 0.3% gain month on month. As usual, if the figures don’t match the forecast, expect the pound to be affected. If the numbers are lower, the pound could fall. The figures are released at 09:30am this morning.

From the US Jobless claims and inflation data is released at lunchtime. Usually, if figures are worse than expected it weakens the currency. Currently though, if we get bad numbers from the US it actually drives investment into USD due to its safe haven status in the current economic uncertainty.

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