All eyes are on the US payrolls figure to chart the path of the FED.
Following a very impressive run for the pound against both the euro and the U.S. dollar, a lack of UK data this week gave an opportunity for the other two to claw back lost ground. However, sentiment surrounding the pound remained strong heading into the week. The big question on analysts’ lips was always going to be: to what extent can the dollar and euro push back against the pound?
The first major release of the week came in the form of the U.S. ISM Manufacturing PMI, released on Tuesday afternoon. Forecasts anticipated a reading of 47.5, up from 46.8 in the previous reading. Final figures came in at 47.2, which is marginally lower than the forecast and still well below the key marker point of 50. However, it was enough of an increase from the previous reading to strengthen the USD, and it actually went on the best run we’ve seen in recent weeks following the release.
From there, we saw a steady retracement in GBP/USD, with the pound progressively gaining ground over the rest of the week. Wednesday’s U.S. JOLTS Job Openings figures saw a sharp spike in GBP/USD after the U.S. posted disappointing results. Forecasts had anticipated a jump from the previous reading of 7.91 million up to 8.09 million, but the final results came in worse than the last reading at 7.67 million, which caused the USD to progressively weaken over the next few hours and into Thursday.
On Thursday, we saw the release of ADP Non-Farm Employment Change, with forecasts expecting a rise from the previous reading of 111k to 144k. However, the final reading came in at 99k. This further disappointing employment data from the U.S. exacerbated the USD sell-off.
Later today, we will get the rest of the U.S. employment data, which has become a key release following recent weakness. Forecasters are divided on how the reading will turn out, with some expecting a figure below 100k and others anticipating a figure closer to 200k. Either way, high volatility is expected.
