The Pound commenced this week on the back foot against the USD, following a dramatic strengthening of the Dollar after their impressive jobs data released Friday afternoon. Particularly noteworthy was the latest Non-Farm Employment Change, initially forecasted at 187k but ultimately surged to an impressive 353k. This unexpected surge prompted a near 1% gain against the Pound, setting the tone for the week as the USD dominated the markets.

The first major data release of the week came from the US on Monday, with the latest ISM PMI Services. Any hopes of a Sterling resurgence against the USD were swiftly dashed as the figure came in at 53.4. Not only did this surpass the critical point level of 50, but it also exceeded forecasts, originally anticipated at 52. This further solidified the Dollar’s position, driving the Pound to its lowest level against the USD since late November.

The subsequent major release in the US, UK, or Eurozone wasn’t until Thursday with the US’s weekly release of Unemployment Claims. Typically, the impact on the markets is limited due to its frequency. This week’s release adhered to the prevailing trend, with Cable trading within a relatively narrow range throughout the week, largely influenced by the preceding Friday’s events.

On Wednesday, Bank of England policymaker Swati Dhingra cautioned that the UK economy was in a precarious position, citing weak consumer spending and declining inflation. Dhingra advocated for an immediate rate cut to mitigate these issues. Her stance, while expected given her sole vote for a rate cut at the last monetary policy hearing, underscored her belief that the Central bank was “underplaying the downside risks to the UK economy” if high rates persist.

Looking ahead, the week is poised for a return to the usual rhythm, following a relatively quiet week data-wise. Not only will Andrew Bailey deliver a keynote speech on Monday, but the UK will also release its latest retail sales, GDP, and CPI y/y figures. Many anticipate a potential retracement against the USD and a further upward push against the Euro following recent underperformance in the Eurozone. However, the downside risk lies in the US, which will also release a plethora of key data points, promising heightened volatility.