This week has witnessed a substantial influx of US data, with the pivotal focal points still anticipated to unfold this afternoon in the form of jobs data. Considering the recent decline in unemployment claims observed yesterday afternoon, there exists a strong possibility of a reduction in the US unemployment rate (initially forecasted to remain steady at 3.5%). Nonetheless, it’s worth noting that unemployment claims often function as lagging indicators and might not exert an immediate and pronounced impact.

The current week has undeniably been marked by an unfavourable performance of the US economy, evident in several key indicators of its economic well-being. The ADP Non-Farm Employment, Consumer Confidence, JOLT Job Openings, and most notably, the latest GDP quarter-on-quarter figures have all displayed downturns. The GDP figure for Wednesday, which came in at 2.1%, down from the previous reading of 2.4% (originally projected to hold firm at 2.4%), has notably contributed to this sentiment. Remarkably, despite these downturns, the fortunes of the USD have not been greatly swayed against major currencies. Both the EUR and GBP have struggled to gain traction, with the rates witnessed in mid-July now seeming distant and almost inconsequential.

The GBP has faced considerable challenges against the USD throughout the past week. However, when considered against other major currencies, the GBP still maintains its advantageous position, notwithstanding a few minor setbacks. It’s crucial to recognise that while the Pound is currently trading at elevated levels, the context of its past performance should not be overlooked. There’s a tendency to underestimate the significance of current rates in comparison to historical levels. For instance, take the GBP/AUD pair. Despite experiencing a decline of around 2% this week, its value at the week’s nadir remains superior to levels observed three years ago at the beginning of this month. In essence, it’s imperative not to be overly concerned if one misses the pinnacle; the existing rate remains favourable.

As we cast our gaze towards the upcoming week, the crux of the matter once again revolves around US data. Even with the upcoming Labour Day bank holiday on Monday, the US is poised to unveil its latest ISM services PMI and subsequent Unemployment Claims figures. The latter’s significance could be amplified based on the outcome of today’s employment figures. These data points stand as vital indicators for assessing the resilience of the US labour market. Barring unforeseen news, the week appears to hold a relatively subdued tone across currency markets.