LONDON: Sterling ticked a fraction higher against the dollar on Friday ahead of key US jobs data, while traders continue to digest the possibility that the Bank of England’s might be done with its most extensive rate-hiking cycle in decades.
At 0948 GMT, the pound was 0.1% higher against the dollar at $1.2197, and virtually flat against the euro at 86.50 pence.
The pound has weakened against the dollar in recent weeks, as a stronger-than-expected US economy led to bets that US interest rates could rise further. Conversely, the Bank of England seems to be nearing the end of its tightening cycle.
Market players said the pound is likely to stay in a holding pattern until key US non-farm payroll data due later. A reading above expectations would reinforce the idea of a further Fed rate hike and send the dollar higher, said Nicholas Rees, FX market analyst at Monex Europe.
“A downside miss would raise worries that the US labour market is beginning to crumble under the pressure of Fed tightening, likely seeing flows into the dollar on a haven bid,” said Rees.
“..in our view, the path for a lower dollar and therefore higher cable looks to be a narrow one this afternoon.”
A business survey on Wednesday showed British services companies suffered a less severe downturn in September than first feared, reflecting a surprise fall in inflation and the Bank of England’s decision to leave interest rates on hold.
“The upwards revision to the September flash PMIs suggests the UK is not heading into recession for now, something likely to be confirmed in the upcoming GDP print,” said Rees. August GDP numbers for the UK will be released on Thursday.
Comments
Comments are closed.