GBP/USD U.S. Jobs Data May Seal the Deal on June Rate Hike and Boost Dollar

The pound is moving southwards versus the US dollar in early trade on Wednesday amid ongoing no trade deal Brexit fears and as investors look ahead to significant macro-economic data releases from both the UK and the US. The pound US dollar exchange rate closed Tuesday’s session 0.4% higher and comfortably back over the key US$1.30 level. This was a solid bounce from Monday’s six week low.

Pound

Investors are looking towards the UK service sector pmi reading. This is the third pmi reading this week, and arguably the most important given that the UK service sectors accounts for around 80% of economic activity in the economy. Analysts are expecting the IHS/Markit data to show that the UK service sector index reached 52.9 in January. A figure of 50 separates expansion from contraction.

A strong print will make a hat-trick of impressive PMI data reads across the week. The manufacturing pmi showed that the sector stagnated in January, an improvement after months of contractions. Yesterday the construction pmi revealed that the downturn in the construction sector appeared to be easing. Whilst the sector contracted in January it did so at a much slower pace.

Recent data has shown that business and consumer confidence has increased on the improved political landscape after the Conservative achieved a clear win in the December election. Another solid print today could boost UK economic growth expectations and lift the pound.

Dollar

The dollar traded broadly higher versus its major peers in the previous session, just not versus the pound. The financial world temporarily set aside coronavirus concerns and focused on the health of the US economy.

On the data front, upbeat US factory order added to the favourable mood towards the greenback. The Commerce Department I that factory orders increased 1.8%, significantly higher than the 1.2% forecast and well above November’s -1.2% decline.

The bigger than expected rebound in factory orders comes after ISM manufacturing data also impressed earlier in the week.

Data is expected to remain very much in focus today and heading toward the non-farm payroll at the end of the week. Today investors will be watching the ISM non-manufacturing pmi and the ADP private payroll numbers. These prints are particularly important because they are considered strong lead indicators for the non-farm payroll, the most important data release of the month.


Currencylive.com is a news site only and not a currency trading platform.
Currencylive.com is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.