September 2, 2021 - Written by John Cameron
STORY LINK GBP/USD Forecast: Pound US Dollar Strengthens on Disappointing US Employment Change
The Pound US Dollar (GBP/USD) exchange rate has strengthened throughout the day as disappointing ADP employment change figures from the US did nothing to support the ‘Greenback’.
The GBP/USD pairing are currently trading around the $1.3796 level as a better-than-expected UK manufacturing PMI supported the appeal of Sterling.
Pound (GBP) Supported by Better-Than-Expected UK PMI Data
The Pound has strengthened against the US Dollar throughout the day on the back of a better-than-expected UK manufacturing PMI reading.
The UK manufacturing PMI softened slightly to 60.3 in August, down from July’s 60.4, the PMI however remained in growth territory.
Rob Dobson, Director at IHS Markit, commented on the latest figures, saying:
‘Severe disruptions to supply chains and raw material shortages eroded the growth momentum of UK manufacturing in August. Although solid gains in output and new orders were achieved, companies reported that production, delivery and distribution schedules were experiencing substantial delays.’
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply gave his own take on the PMI:
‘August’s results were almost a carbon copy of the previous month where recovery for manufacturers continued, but there were signs of stagnation and the rise in overall activity slipped back to the weakest for half a year. Businesses were thwarted by brittle supply chains struggling with shortages, port and transportation difficulties as delivery times stretched not to days or weeks, but months for some goods.’
US Dollar (USD) Dips on ADP Employment Change Figures
The US Dollar has found itself struggling across the board as the latest US ADP employment change figures missed forecasts and increased less than expected.
Following the latest ADP employment change figures from the US, the US Dollar began to fall against its major rivals.
Andrew Hunter, senior US Economist at Capital Economics commented on the latest figures, saying:
‘Admittedly, the details show that the slowdown in private employment growth over the past couple of months has been driven mainly by leisure & hospitality, education & health and “other services”, which would be consistent with the idea that rising virus fears are prompting consumers to avoid high-contact services again.’
‘That said, the high-frequency activity indicators and the initial jobless claims data suggest there has only been a modest slowdown in the pace of recovery, although the sharp declines in measures of consumer confidence are a little more disconcerting.’
GBP/USD Exchange Rate Outlook: Initial US Jobless Claims in Focus
For Pound investors, a lack of notable data from the UK could leave Sterling open to losses on Thursday.
The ‘Greenback’ could head higher tomorrow on the back of initial US jobless claims if they show a sustained fall in claims.
The GBP/USD exchange rate will continue to be driven by the global market mood over the weekend, concerns over surging coronavirus cases globally continue to limit risk-correlated currencies and drive the safe-haven US Dollar higher.
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TAGS: Pound Dollar Forecasts