The Pound-Dollar rate could come under pressure if UK jobs data weakens BoE hike expectations, while firmer US employment figures may support the Dollar.
The Pound US Dollar (GBP/USD) exchange rate was trapped in a narrow range at the start of this week as markets braced for a run of high-impact UK economic releases.
At the time of writing, GBP/USD was trading at around $1.3321. Virtually unchanged from Monday’s opening levels.
Pound to Dollar (GBP/USD): 1.331799 (-0.09%)
Dollar to Yen (USD/JPY): 158.40656 (+0.26%)
DAILY RECAP:
The Pound (GBP) was left to trade sideways on Monday, as GBP investors awaited a stream of notable UK macroeconomic data scheduled for release in the coming days.
Some of the more influential releases include the UK’s latest jobs and inflation data, releasing on Tuesday and Wednesday, respectively.
These will be the final employment and CPI releases ahead of the Bank of England (BoE) November policy meeting and may cement or dampen expectations for a 25bps interest rate hike next month.
The US Dollar (USD) faced modest headwinds on Monday as lingering concerns over the recent AI stock sell-off continued to erode expectations for further Federal Reserve interest rate hikes.
The recent turmoil in technology stocks has centred on growing doubts over the profitability of AI investments and the ability of heavily indebted data-centre operators to finance their ambitious expansion plans.
This has led some investors to rein in their expectations for further Fed monetary tightening amid speculation that the US central bank will be reluctant to increase the debt burden off the sector that appears to be single-handedly underpinning US economic resilience.
Near-Term GBP/USD Forecast: Cooling UK Labour Market May Weaken Sterling
Turning to Tuesday’s session, the Pound to US Dollar (GBP/USD) exchange rate may stumble with the publication of the UK’s latest jobs report.
August’s data is expected to report both a rise in unemployment as well as a slowdown in wage growth.
Signs of a cooling labour market may be seen as weakening appetite within the BoE to tighten monetary policy and could drag on Sterling if it triggers a dovish repricing of rate expectations.
Meanwhile, another rise in the latest ADP weekly employment figures in the US could lend support to the US Dollar on Tuesday.
Our currency coverage draws on live market data, official economic releases and published bank research.
