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Markets await US jobs report

Daily Currency Update

GBP/USD has dropped back under the 1.20 level over the past 24 hours mainly driven by a strong private sector job report from the US which showed 235k people were added to the US workforce in December much higher than the 152k predicted. This morning, the monthly Halifax House Price Index has applied some extra downward pressure to the pound, which showed a -1.5% drop in house prices, the fourth consecutive drop in a row. To put this in perspective during the midst of the Covid-19 pandemic we only saw three consecutive falls before there was a strong rebound and you have to go back to 2012 to see the last time four consecutive falls were recorded. Domestically it is another quiet day on the data front with the pound likely to be moved by events from overseas. GBP/USD is currently at 1.1885 and GBP/EUR is around 1.13.

Key Movers

As mentioned earlier the US monthly private sector jobs report, the ADP Non-Farm Employment Change, came in far better than expected yesterday which helped strengthen the US dollar across the board. Today’s main event is the US monthly jobs report which contains the Non-Farm Employment Change reading from the Bureau of Labor Statistics. An extra 200k people are predicted to have found employment in December with the level of unemployment expected to hold steady at 3.7%. As usual, should the figures come out better than expected, we should see the dollar rally as it will keep the pressure on the Federal Reserve to keep hiking rates to ensure inflation continues on its downward trend. Before this we have the monthly inflation reading from the Eurozone with a drop from 10.1% to 9.6% eyed for the Consumer Price Index. Earlier this week we saw inflation fall further than expected in Germany, Spain, and France so there is hope that inflation has now peaked, and we are on a downward trajectory. EUR/USD is down to 1.0515 ahead of what could be a choppy day in FX markets.

Expected Ranges

  • GBP/USD: 1.1800 - 1.2040 ▼
  • GBP/EUR: 1.1235 - 1.1400 ▼
  • GBP/AUD: 1.7500 - 1.7700 ▼
  • EUR/USD: 1.0390 - 1.0625 ▼