GBP/USD close to 14 month low ahead of US jobs report
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Daily Currency Update
The sell-off in the pound throughout the week appears to have come to an end for now, with yesterday's low of 1.2238 likely acting as a floor in the short term. Later today, the December US jobs report will be released, with the unemployment rate expected to hold steady at 4.2% and the Non-Farm Payrolls figure anticipated to show that 164,000 people found work in the month. As usual, any overshoot would benefit the dollar, leaving the pound vulnerable to significant losses if this occurs.Rising gilt yields (the interest the UK government pays to borrow) have reached their highest level since 2008. A strong US jobs report would likely put upward pressure on US government yields, which could ripple through to UK and other government bonds globally. Holders of sterling—and UK Chancellor of the Exchequer Rachel Reeves—will be hoping for an undershoot, which could help stabilise the situation further.
The pound is likely to face further turbulence later this month when Donald Trump takes office, meaning the volatility experienced so far this year may persist for some time. Currently, GBP/USD stands at around 1.23, while GBP/EUR is at 1.1925.
Key Movers
It has been a very quiet week for data releases from the UK and the Eurozone, and today is no exception, with little of significance being published. Once today's US jobs report is released, market attention will shift back to comments from the President-elect as his January 20 inauguration approaches.Trade tariffs remain a primary focus for the markets, although there are reports that a meeting between him and Russian President Putin is being planned after he assumes office. Despite Trump's statements suggesting he could end the conflict on his first day as President, his exact stance on the matter remains unclear.
EUR/USD is hovering around 1.03, and a test of the 26-month low of 1.0221, last seen on January 2, is likely if the US jobs data significantly exceeds expectations.
Expected Ranges
- GBP/USD: 1.2200 - 1.2365 ▲
- GBP/EUR: 1.1895 - 1.1985 ▲
- GBP/AUD: 1.9785 - 1.9950 ▲
- EUR/USD: 1.0225 - 1.0370 ▼