Daily Currency Update

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Sterling steady ahead of US jobs data

GBP - British Pound

After slumping lower last week, the pound has recouped some of its losses with GBP/USD trading around the 1.36 level. Fuel shortages and delivery disruption headlines are fading from investors’ memories and sterling has managed to regain its footing as a result.

In the absence of any domestic data today, the pound will likely be driven by news centred around COVID-19, energy prices, and this afternoon’s US jobs report. Inflation is gaining more and more attention in the UK given the massive spike in energy prices seen over recent weeks. Any moderation in the wholesale price of gas or electricity could be pound beneficial, given the spending squeeze being seen by UK households. GBP/EUR continues to trade at the higher end of its annual range sitting at around 1.1770.

Key Movers

Financial markets around the world are awaiting the much anticipated monthly US jobs data from the States later today. US Non-Farm Payrolls are expected to have risen by 500k for the month of September. Comments over past months from policy makers at the US Federal Reserve have stated, despite the current high level of inflation, they are waiting to see employment return close to pre-pandemic levels before they consider making any adjustments to monetary policy. A strong reading today could see expectations grow that financial support will start to be withdrawn around Christmas/New Year which could benefit the US dollar.

Next week eyes will again be drawn to US inflation data with the latest US CPI number scheduled to be released on Wednesday lunchtime. Annual inflation is currently above 5% in America and as a result there is a growing consensus that the US Federal Reserve should start to remove COVID-19 support policies that have propped up the economy for the past 18 months. EUR/USD trades at around 1.1550.

Expected Ranges

GBP/USD: 1.3540 - 1.3650 ▲

GBP/EUR: 1.1720 - 1.1835 ▲

GBP/AUD: 1.8570 - 1.8750 ▼

GBP/NZD: 1.96 - 1.98 ▼

GBP/CAD: 1.6990 - 1.7160 ▼