Losses Forecast For Pound to Dollar Exchange Rate (GBP/USD)

Modified: Thursday, 5 September 2013 18:56 BST - Written by Tim Boyer

STORY LINK Losses Forecast For Pound to Dollar Exchange Rate (GBP/USD)

The Pound Dollar exchange rate (GBP USD) has defied gravity and trended higher during recent weeks. However, losses for the Greenback could be stemmed if this afternoon’s US Non-Farm Payrolls data shows at or above the expected 180,000 level.

The Pound US Dollar exchange rate (GBP/USD) is currently trading down by 0.22% at 1.5589 GBP/USD. The US Dollar Pound exchange rate is currently trading at 0.6415 USD/GBP.

Confusingly, the US Dollar has remained relatively weak against the Pound in recent weeks in spite of the fact that conventional wisdom amongst analysts holds that the US Federal Reserve will begin tapering its Quantitative Easing programme in under two weeks time. The Pound Dollar exchange rate (GBP/USD) has briefly climbed to above the 1.5700 level during the past fortnight, suggesting that institutional investors are requiring further confirmation before they are willing to believe that the US central bank is about to begin the winding down of its asset purchase scheme. Today may well prove to be the day when the requisite confirmation proves to be forthcoming, as the latest edition of the closely-monitored Non-Farm Payrolls data is published in the States.

Most analysts believe that a showing of close to the expected 180,000 NFP figure later today will seal the deal and make a trimming of QE from the Fed in the middle part of this month an inevitability. However, yesterday’s US employment data was mildly disappointing in tone, meaning that the 180k NFP target may not be achieved later today. Yesterday’s ADP Employment Change number, which measures the number of new positions created in the private sector of the world’s leading economy, came out below par, as did the latest weekly Initial Jobless Claims figure.

If today’s NFP figure does disappoint, then a QE cut from the Fed may not be completely off the cards – if this month’s overall Unemployment Rate data for the US economy shows a dip in the overall level of joblessness in the States, then expect the Buck to hoover up support regardless of the NFP print which is published at the same time. If this proves to be the case, then look for the Pound Dollar exchange rate (GBP/USD) to head southwards once more with the key psychological threshold of 1.5000 providing a logical target.

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