Pound Wipes Weekly Losses As US Jobs Data Drops Dollar – Global Banking & Finance Review



By Ritvik Carvalho

LONDON (Reuters) – The pound sterling appreciated against the dollar on Friday and erased its losses against the greenback this week as weaker-than-expected U.S. employment data pushed the dollar down from its recent summits.

A recent series of strong economic data releases from the United States has propelled the dollar index – which measures the greenback against a basket of currencies – this week to its highest level since mid-May.

The gains came as investors expected the Federal Reserve to respond to a warming economy and adopt a tightening policy sooner than expected.

However, the release of jobs data on Friday sent the dollar down and gave the pound a little breathing space, which was previously set for its first week of losses in five. The pound is now on the way to end the week flat.

As of 1:11 p.m. GMT, the British pound was nearly 0.7% higher against the dollar at $ 1.4189. Against the euro, it was up 0.3% to 85.78 pence.

“I expect the pound to hold on to its gains against the dollar today as markets digest the disappointing impression of the NFP (non-farm payroll) in the context of what it means for politics from the Fed, “said Viraj Patel, global macro strategist at Vanda Research.

The pound, which has been the second best performing G10 currency against the dollar since the start of the year, has suffered from the strength of the dollar in recent days and fears that a new variant of the coronavirus spreading through the Britain will not affect plans to further reopen the economy.

The UK government will review plans to fully open the economy on June 14.

The pound sterling has been one of the best performing currencies in the G10 this year, at one point in the lead, as a bet for a rapid reopening of the UK economy thanks to the country’s vaccination program.

The positioning of speculators is always directionally net “long” on the pound, which means that the market is betting on the future gains of the currency against the dollar. [IMM/FX] [CFTC/]

ING strategists have remained broadly positive on the outlook for the pound despite the news.

“We doubt that the June 14 decision to fully open the UK economy will have a significant impact on the outlook for the pound,” they said in a morning note to clients.

“We believe there is currently good momentum behind the economy – enough to support the reasonably bullish BoE (Bank of England) set of forecasts and possibly maintain expectations that the BoE may tighten ahead of the Fed. at 2H22. “

(Reporting by Ritvik Carvalho; editing by David Evans and Ros Russell)



Source link

Previous Analysis: India's vaccine inequality worsens as campaign languishes
Next HIVE Blockchain becomes a limited partner of Alpha Sigma

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *