ExchangeRates.org.uk - At the time of writing GBP/USD was trading at $1.2697, virtually unchanged from Thursday’s opening rate. The US Dollar (USD) recouped some of its recent losses on Thursday following some better-than-forecast jobs data. While the scope of USD’s upside remained largely limited, the ‘greenback’ was propped up by an larger-than-expected decline in the latest initial jobless claims report. The number of US citizens claiming unemployment benefits fell to 233,000 for the week ending 3 August, falling below market projections of 240,000 and declining from an upwardly revised reading of 250,000 in the previous week. With the release coming hot on the heels of last week’s bleak US employment data, signs that the US labour market may be stronger than previously suspected served to keep USD afloat on Thursday afternoon.
Joe Brusuelas, Chief Economist for RSM US LLP, commented on the online platform X: ‘Big drop in initial jobless claims to 233K. Anything in that range tends to suggest a fairly healthy labour market. Non-seasonally adjusted down to 203K. Large drop in Texas of 7K. This tends to suggest the scepticism that weather played a role in the July jobs report especially around those not at work-both full & part time is warranted’
After undergoing a major selloff earlier this week as fears of a US recession gripped global markets, USD seemed to end the week on a quiet note. However, firm expectation that the Federal Reserve’s will begin an aggressive monetary unwinding cycle next month applied additional pressure to USD exchange rates, further preventing a robust rebound for the US Dollar.
Pound (GBP) Pressured amid Data Lull
The Pound (GBP) was largely subdued on Thursday as the UK calendar remained light. Amid an absence of fresh UK data, investors remained reluctant to place any aggressive bets on GBP as civil unrest continued to sour Sterling sentiment. Far-right riots across British towns throughout the week have undermined hopes of renewed political stability under a new Labour government, thereby deterring investor interest in the Pound. Elsewhere, ramped-up Bank of England (BoE) interest rate cut bets further weighed on GBP. After concerns of global recessions rocked markets earlier in the week, markets are now pricing in an additional two rate cuts from the central bank this year.
Pound US Dollar Exchange Rate Forecast: US Jobs Data in Focus
Looking ahead, a data-light end to the week in both the UK and the US could see the Pound US Dollar exchange rate left to trade without a clear direction. With data in short supply, global risk dynamics could continue to drive movement in the currency pairing. Cheery trading conditions could lend the increasingly risk-sensitive Pound support against its safer rivals. Alternatively, a return to jittery trade could see USD take precedent. Elsewhere, surmounting interest rate cut speculation may impact currency movement. As markets continue to price in multiple rate cuts from both the Fed and the BoE in the coming months, each respective currency may face additional pressure amid a lack of supporting data.
This content was originally published on ExchangeRates.org.uk
