Daily Currency Update

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US jobs data due today

GBP - British Pound

Today Non Farms Payroll figures are due out of the US - the largest, most important jobs report produced. The consensus is for 720k jobs to have been added, but ADP figures earlier in the week did miss the mark, so there are a lot of nerves amongst investors.

Why is this jobs data important though? It impacts the Federal Reserve and their potential plan to taper the large asset purchase programme currently in place. Jobs figures, as well as inflation levels, are two key components that the Fed looks at and if Non Farms is a hit today, then the Fed could announce a taper plan later this month to begin in November.

This move as well could add fuel to the US dollar and see it strengthen amongst its G10 peers as well as emerging market currencies.

Despite all this, investors are nervous, and we saw the effects of this yesterday with broad based US dollar weakness. The US dollar Index, which measures the US dollar against a broad basket of currencies, weakened 0.3%, whilst the pound benefited with GBP/USD rising to above 1.3800, a high of around two weeks.

Key Movers

There is a raft of Final Services PMI figures out of Europe this morning and it will be interesting to see if the Eurozone is suffering the same ill-effects of supply chain shortages that the UK is currently struggling with. European manufactures have been suffering and whilst the sector is booming they are now faced with the constant issue of a lack of parts and components. There’s now a significant output gap between where manufacturers are able to produce, and orders being made. All of this is adding to costs on factory floors, and we saw Eurozone inflation reach a 10 year high this week. With inflation jumping to 3% a headache is created for the ECB, which in more usual economic circumstances may raise interest rates. This could add support to the single currency, but investors believe that the ECB isn't interested in adjusting its monetary policy for the time being. EUR/USD for the time being remains below 1.1900.

Expected Ranges

GBP/USD: 1.3730 - 1.3850 ▲

GBP/EUR: 1.1620 - 1.1660 ▲

GBP/AUD: 1.8600 - 1.8720 ▼

EUR/USD: 1.1785 - 1.1850 ▲