US dollar weakens despite positive data
Tuesday 6 April, 2021
Daily Currency UpdateAnalysts continue to look at GBP favourably, as the continued success of the vaccination distribution has led to two Swiss banks to revise their forecasts on the British currency. Both UBS and Credit Suisse have changed their short term outlook on the pound and suggest that it will rise against both the euro and the US dollar. They expect GBP/EUR to push above the psychological 1.20 barrier again, for the first time since February 2020. Market sentiment could remain the key driver for the pound as the week ahead is light on any substantial data of note. The pound may see a slight lift at the end of the week, in preparation of the country leaving the national lockdown.
Key MoversFriday saw further positive US employment data as 916k jobs were added as opposed to the 652k expected. Despite the better-than-expected data, the US dollar has shown vulnerability and weakness since then as EUR/USD is back at 1.18 again. Despite being counterintuitive, it is easier to understand if you read between the lines. The Fed have said that they will look at a broad range of labour market indicators to ascertain ‘full employment’, one being labour market participation. This figure sits at 61.5%, suggesting a large percentage of the workforce is not looking for a job, despite the opportunities being there.
- GBP/USD: 1.38 - 1.3925 ▲
- GBP/EUR: 1.1665 - 1.1820 ▲
- GBP/CAD: 1.7285 - 1.7515 ▼
- GBP/AUD: 1.8100 - 1.8305 ▲