This morning I posted about the US Non-Farms Payroll data. As I explained, the actual number is often very different from forecast. The forecast was for 180,000 new jobs to have been created, but the actual number was much higher; 271,000.00.
I’m posting this update as it’s a great example of how data can affect the rate, and the inverse correlation that we often see with GBP/EUR rates and GBP/USD rates. Look at what happened when the numbers were released:
As you can see, the strong jobs numbers strengthened the US Dollar and caused rates to drop by 1.5 cents. At the same time, the opposite happened to Pound/Euro rates, climbing 1 cent to get back to the €1.40 level. We often see this ‘inverse correlation’ with GBP/EUR and GBP/USD and it’s a good example of what causes exchange rates to move.
Why did this happen?
The jobs numbers mean the US economy is doing very well indeed. In turn, this means it’s now very likely indeed the USA will raise interest rates. Investors therefore dumped the Euro and bought the Dollar, which is why we’ve seen the sharp movement today.
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