Daily Currency Update

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What's going on with the US jobs market?

USD - United States Dollar

If there wasn't uncertainty around the US Dollar anyway yesterday's jobs data threw everything up in the air for a couple of reasons. The figures from ADP missed expectations for July by some way coming in at 167k vs the 1.2m expected whilst June's numbers were revised northwards from 2.36m to 4.31m. This had investors scratching their heads as the US Dollar was sold off whilst US equities remained bullish.

The US Dollar has been on a systemic slide against both the Euro and Pound as of late whilst the Dollar Index is at lows not seen since May 2018. President Trump has promised a 'big number' for tomorrow's Non-Farms job report but this still leaves the US Dollar on a knife edge. If tomorrow's jobs report also misses expectations then we could see further US Dollar weakness as investors become sceptical about the jobs recover and even more sceptical about the economic recovery that should follow.

Hope could come in the form of an agreement between the Democrats and Republicans on an extension to the stimulus package but in the meantime its wait and see for the world's biggest currency.

Key Movers

As expected this morning's Bank of England interest rate decision didn't throw up any surprises. However there were a couple of key takeaways from the update; firstly the central bank is much more optimistic about the UK's economic recovery than many forecasters or indeed consumers on the high street. The bank, and in particular Andy Haldane the Chief Economist, see UK GDP returning to Q4 2019 levels by the end of 2021 with household spending leading the way before business spending catches up. Secondly, there was no mention of negative rates being discussed which has added support to the pound this morning. Remember Bank of England governor Andrew Bailey is speaking at 12.30 so it will be important to see what he has to say here. The pound at the moment is riding a wave of US Dollar weakness with the looming Brexit issue remaining the elephant in the room. In the short term though the March high of 1.3200 will be another significant milestone for businesses and investors.

Expected Ranges

GBP/USD: 1.3060 - 1.3200 ▲

GBP/EUR: 1.1040 - 1.1130 ▲

GBP/AUD: 1.8160 - 1.8400 ▲

GBP/CAD: 1.7350 - 1.7500 ▲

GBP/NZD: 1.9720 - 1.9850 ▲