Currency News

Daily Exchange Rate Forecasts & Currency News

US Jobs Data & Gross Comments Weigh on GBP USD Exchange Rate Forecast Today

May 6, 2016 - Written by Frank Davies

The Pound has dropped against the US Dollar despite recent poor US stats; the UK's low PMI printings may have triggered this outcome.

Bill Gross Comments Weigh on GBP/USD Exchange Rate



Legendary bond trader Bill Gross has this week painted a bleak picture of the structural problems facing the world’s leading economies. The former PIMCO fund manager suggested in a report published earlier on Wednesday that, due to a widespread hollowing out of the global labour market thanks to the advancing application of technology, central banks including the US Federal Reserve will be forced into permanently loose monetary policy stances.

Gross suggested that in the ‘new normal’ global economy, developed nations will increasingly have to cope with reduced levels of employment as new technologies are adopted and populations age. His solution to this challenge involves the introduction of ‘helicopter money’, a process which sees central banks making new money available to governments who then spend it on infrastructure projects. Gross explained that,

‘Private banks can fail but a central bank that can print money acceptable to global commerce cannot. I have long argued that this is a Ponzi scheme and it is, yet we are approaching a point of no return with negative interest rates and QE purchases of corporate bonds and stock.’

He went on to assert that he believes that, ‘for now central banks will print more helicopter money via QE (perhaps even the U.S. in a year or so) and reluctantly accept their increasingly dependent role in fiscal policy. That would allow governments to focus on infrastructure, health care, and introduce Universal Basic Income for displaced workers amongst other increasing needs. It will also lead to a less independent central bank, and a more permanent mingling of fiscal and monetary policy that stealthily has been in effect for over 6 years now. Chair Yellen and others will be disheartened by this change in culture. Too bad. If there is an answer, the answer is that it’s just that way.’

GBP/USD Forecast to Trend Higher after Disappointing US Jobs Report




This afternoon’s US jobs data, which revealed that the overall level of unemployment Stateside had stubbornly remained at 5.0% last month, when analysts had been anticipating a fall to 4.9%, lend Gross’s theory some credence.
Advertisement

Not for the first time in recent months, the headline US ‘Non-Farm Payrolls’ job creation figure also missed to the downside, causing many analysts to forecast that the Pound Sterling US Dollar exchange rate may now head higher.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.


TAGS: American Dollar Forecasts Pound Dollar Forecasts Pound Sterling Forecasts

Comments are currrently disabled