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The pound surged against the US dollar yesterday, which struggled as more disappointing data arrived.
GBP/USD shot up by half a cent on Wednesday, as underwhelming US jobs data boosted the case for a swift reaction from the Federal Reserve this month.
Sterling traded up slightly against the euro before seeing its advances beaten back in the afternoon session. EUR/USD also benefitted from American economic data — the euro climbed to its weekly high against the US dollar after publication yesterday afternoon.
US job openings had been forecast to total 8.1mn in July. However, the 7.673mn figure represented a bad miss and the fact it was the lowest number in three years only added to the chorus of concern around a potential economic slowdown. Job openings fell across almost all sectors, aside from professional and business services and federal government positions.
The Bank of Canada yesterday opted to cut interest rates by 25bps (0.25%) to 4.25%. That decision had been expected among most economists, so much so that the Canadian dollar actually rose against the US dollar following the announcement.
UK services sector growth reached a four-month high of 53.7 in August, according to S&P Global’s UK PMI study. Recent improvements to business activity and new work were sustained last month, while increased hiring activity meant efforts to clear work backlogs increased at their fastest pace in a year, the study said.
Global stocks experienced a sharp sell-off yesterday, following on from disappointing US manufacturing data on Tuesday and more bad news from the labour market. Chip giant Nvidia saw its share price drop dramatically before that spread to other tech indexes as fears of a US economic slowdown spread.
In the battle to become Rishi Sunak’s successor as leader of the Conservatives, Robert Jenrick secured the most amount of votes in the first round. Former home secretary Priti Patel was meanwhile knocked out of the race entirely.
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GBP: Staying put
The light schedule of UK data has helped sterling hold on near its highest in a month against its main rivals. Expect more volatility (and less security) in its position as the news ramps up next week.
GBP/USD: the past year
EUR: Euro faces technical pressures
Financial analysts will tell you EUR/USD may come under pressure soon due to mathematical trading models – collectively known as technical factors. Yesterday though, it benefited from economic fundamentals, particularly the US JOLTs job openings report.
GBP/EUR: the past year
USD: Data misses hinder US dollar
The US dollar has suffered post Labor day as a couple of high-profile economic disappointments raise the temperature for the Federal Reserve. The US dollar has ceded ground to both the euro and the pound since Tuesday.
EUR/USD: the past year
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