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GBP USD Forecast Pound to US Dollar Exchange Rate Weakens as Non-Farm Payrolls Impress

August 6, 2021 - Written by John Cameron

The Pound to US Dollar (GBP/USD) exchange has weakened today as a lack of economic data from the UK does little to support the appeal of Sterling heading into the weekend.

At the time of writing the GBP/USD pairing are trading at around $1.3912 as a sour market mood bolsters the appeal of the ‘Greenback’ as the latest non-farm payroll figures from the US provide added support.

Pound Sterling (GBP) Exchange Rate Muted on Lack of Economic Data

The Pound has been muted against the US Dollar for much of the day as a lack of economic data from the UK limits the appeal of GBP exchange rates.

Whilst the Bank of England’s (BoE) recent interest rate decision and press conference was well-met by investors, it was not enough to bolster Sterling heading into the weekend.

The bank chose to keep interest rates on hold at 0.1% though took a more hawkish tone moving forward:

‘The committee judges that, should the economy evolve broadly in line with the central projections in the August Monetary Policy Report, some modest tightening of monetary policy over the forecast period is likely to be necessary to be consistent with meeting the inflation target sustainably in the medium term.’

Ian Stewart, chief economist at Deloitte, commented on the decision from the BoE, saying:

‘A supercharged recovery has hit supply bottlenecks earlier than the Bank expected. The pace of growth in inflation is challenging the view that rising prices are a temporary phenomenon.’

‘Given the strength of the recovery it’s hardly surprising that the Bank has signalled that some tightening of policy is likely to be needed in the next two years. If there is no other major wave of Covid-19 during the winter and the economy performs in line with the Bank’s forecasts, the first rate rise is likely to come in the spring or early summer of next year.’

US Dollar (USD) Exchange Rate Supported by Upbeat Non-Farm Payrolls

The US Dollar (USD) has been supported against the Pound heading into the weekend following the latest non-farm payrolls data from the US this afternoon.

Non-farm payrolls beat market expectations coming in at 943,000 during July to bolster the ‘Greenback’.

The report from the US Bureau of Statistics regarding the jobs increase said:

‘Staffing fluctuations in education due to the pandemic have distorted the normal seasonal build-up and layoff patterns, likely contributing to the job gains in July. Without the typical seasonal employment increases earlier, there were fewer layoffs at the end of the school year, resulting in job gains after seasonal adjustment.’

GBP/USD Exchange Rate Forecast: US Job Opening Figures in Focus

Heading into next week, US Dollar traders will be looking towards the latest US JOLTs job openings figures on Monday for June which could give a broader indication into how the US labour market is performing.

A quieter start of the week for Sterling will see investors keep an eye on any further domestic coronavirus developments from the UK to drive movement in the Pound.

The GBP/USD pairing will continue to be driven by the market mood for much of next week, if the market mood remains sour then the ‘Greenback’ will push higher.

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