ExchangeRates.org.uk - At the time of writing the GBP/USD was trading at around $1.3268, virtually unchanged from Wednesday’s opening levels. The US Dollar (USD) managed to hold steady against the majority of its peers on Wednesday despite a return to risk-on flows, as the US currency was supported by the publication of some better-than-expected mid-tier jobs data. The latest ADP employment change survey came in well above expectations this month, with the index up from a previous reading of 99,000 to 143,000, well above the expected 120,000 reading. The latest labour data came just two days ahead of the upcoming non-farm payrolls data, and undermined current Federal Reserve interest rate cut bets, ultimately bolstering USD as a result.
Naeem Aslam, chief investment officer at Zaye Capital Markets, a trading research company, said: ‘The US ADP data rolled in like a breath of fresh air for the Fed, printing a much stronger reading than anticipated. This news has certainly put a damper on hopes for a ballistic shift in monetary policy.’
The Pound (GBP) was muted against the majority of its peers on Wednesday as a lack of new economic catalysts left the currency largely directionless. Adding to the GBP's woes were mounting concerns about the UK's forthcoming Autumn Budget, scheduled for later this month. Investors are growing increasingly anxious following reports of a £22bn deficit in public finances inherited from the previous Conservative government. The worry is that the Chancellor may introduce a series of tax increases and spending reductions to address this shortfall, preventing GBP from posting any meaningful gains.
GBP/USD Exchange Rate Forecast: PMIs in the Spotlight
Looking ahead, the primary catalyst of movement for the Pound US Dollar exchange rate looking at Thursday will likely be the publication of the US’s latest Ism services PMI alongside the UK’s own services PMI. For the UK, the key services sector is expected to report a slight decline in this months reading, with the index expected to decrease from 53.7 to 52.8. Despite this drop, as the figure remains well within expansion territory (above 50), the GBP exchange rates could strengthen following the release. As for the US Dollar, the US’s services index is forecast to rise, expected to increase from 51.5 to 51.7, and could bolster USD exchange rates as a result.
This content was originally published on ExchangeRates.org.uk