GBP/USD: Second Biggest Weekly Drop since Election

Pound sterling was slightly up against the US dollar on Friday afternoon with currency markets flattening out after a mixed US jobs report that wasn’t enough to justify more interest in the dollar after a week of solid gains.

GBP/USD was higher by 16 pips (+0.12%) at 1.2944 with a daily price range of 1.2922 to 1.2947 as of 1.30pm GMT. The currency saw selling pressure come in below 1.2950 keeping daily gains in check. Gains today reduce the -0.55% fall yesterday and the -1.93% weekly decline.

Pound sterling drifted higher against the dollar on Friday

There is no more significant UK economic data left to drive the pound until the release of industrial production figures on Tuesday next week so on Friday Sterling was able to drift higher against the dollar, awaiting action in the dollar after non-farm payrolls.

It has been a difficult week for Sterling in a big change of fortunes after having been one of the top performing currencies in January. Focus has centred on the upcoming trade negotiations with Europe and all the potential difficulties they could throw up for the UK economy. This was exemplified this week when reports suggested the EU would revise MiFID regulations governing financial markets in Europe to the detriment of the City of London.

US dollar

After an initially positive to reaction to the non-farm payrolls report the US dollar as well as US index futures started to wobble as the minutes went by. The data was overall positive but a couple of missed datapoints gave traders pause.

US job growth surged by 225,000 in January, well above expectations and much faster than the 145,000 in December. However wage growth rose 0.2% month-over-month, faster than the 0.1% in December but not quite matching up with forecasts of 0.3%. The unemployment rate rose slightly to 3.6% when it was expected to remain steady at 3.5%.

Expectations had been high leading into the report so the although the headline jobs figures were top notch, the other statistics encouraged some profit-taking in the dollar after a strong week of gains against the pound.

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