The US Dollar has strengthened this afternoon following the release of the latest jobs numbers. While the number of new jobs created was lower than expected, the unemployment rate fell more than expected and average earnings was also better than forecasts at 2.9%.
This data combined with other factors means it’s now almost a given that the US Federal Reserve will raise interest rates again in December.
This has pulled GBP/USD rates down to just above the $1.30 mark. In the last 2 weeks the Pound/Dollar rate has fallen from $1.36 to $1.30. The fall is due to a combination of the USD gaining strength and the Pound getting weaker.
Pound falls against Euro
Sterling has also fallen across the board today, falling to the mid €1.11’s against the Euro. Part of the reason is UK political uncertainty, due to the possibility of a leadership contest. The Conservative Party conference did not go well, and there are calls for Mrs May to go. The markets would not like the uncertainty that this would create, not to mention what it would mean for Brexit negotiations. As such, the Pound has been sold off and has weakened.
UK Interest Rates to affect the Pound?
There are also doubts about the Bank of England raising interest rates this year. There had been talk of a rate hike, but it’s looking now like it was simply the BoE trying to talk up Sterling due to the currency becoming too weak. The latest economic data does not suggest a rate hike is coming any time soon, which has eroded some of the gains the Pound made last month.
UK Data in focus for next Sterling move
The next key UK data to look out for is on Tuesday, when we will see the latest Industrial and Manufacturing production figures, along with a GDP estimate and Trade balance numbers. If these figures disappoint then the Pound is likely to fall further. If however the figures come in better than expected it could help the Pound gain against other currencies.