Sterling treads water as dollar braces for US jobs
Published: 03:09 PM,Sep 05,2024 | EDITED : 07:09 PM,Sep 05,2024
Economists surveyed by Reuters expect to see a rise of 160,000 in the number of workers on US nonfarm payrolls in August, up from July's 114,000 increase. — Reuters
LONDON: The pound held steady on Thursday, heading for a modest weekly gain versus the dollar, ahead of US employment data that could set the tone for currency markets for the weeks and months ahead.
The euro, which hit a one-month low against the pound last week, headed for its firstly weekly rise since early August, up 0.1 per cent.
Sterling was last flat at $1.3154, up 0.2 per cent this week and some distance from last week's two-year high at $1.3269. Against the euro, the pound was also steady at 84.26 pence.
The Bank of England meets in two weeks to set monetary policy. Right now, the derivatives market shows traders see very little chance of a rate cut this month, but a quarter-point cut is fully priced in for November.
The BoE was the first among major central banks to raise rates back in 2021, but is likely to be among the slowest to lower them, which has given the pound a lift this year.
BoE economist Huw Pill, who voted against a rate cut in August, is scheduled to speak at an event in Brussels later on Thursday.
'It is unclear whether he will go near monetary policy in his speech today, but if he does, any signs of greater confidence in the disinflation process could also hit the pound,' ING strategist Chris Turner said.
Turner said his team expected to see sterling trade in the low $1.30s against the dollar in the medium term.
Sterling is typically more volatile than the likes of the euro and this week's ructions across the broader markets have hit the pound.
But with US monthly employment data due on Friday, analysts see overall activity in the currency market remaining on an even keel for the time being.
Economists surveyed by Reuters expect to see a rise of 160,000 in the number of workers on US nonfarm payrolls in August, up from July's 114,000 increase. Markets are currently pricing in around 100 basis points worth of rate cuts from the Federal Reserve over the remainder of this year.
Friday's employment data could determine whether the Fed cuts by a quarter point next week, or by an outsized half point. — Reuters
The euro, which hit a one-month low against the pound last week, headed for its firstly weekly rise since early August, up 0.1 per cent.
Sterling was last flat at $1.3154, up 0.2 per cent this week and some distance from last week's two-year high at $1.3269. Against the euro, the pound was also steady at 84.26 pence.
The Bank of England meets in two weeks to set monetary policy. Right now, the derivatives market shows traders see very little chance of a rate cut this month, but a quarter-point cut is fully priced in for November.
The BoE was the first among major central banks to raise rates back in 2021, but is likely to be among the slowest to lower them, which has given the pound a lift this year.
BoE economist Huw Pill, who voted against a rate cut in August, is scheduled to speak at an event in Brussels later on Thursday.
'It is unclear whether he will go near monetary policy in his speech today, but if he does, any signs of greater confidence in the disinflation process could also hit the pound,' ING strategist Chris Turner said.
Turner said his team expected to see sterling trade in the low $1.30s against the dollar in the medium term.
Sterling is typically more volatile than the likes of the euro and this week's ructions across the broader markets have hit the pound.
But with US monthly employment data due on Friday, analysts see overall activity in the currency market remaining on an even keel for the time being.
Economists surveyed by Reuters expect to see a rise of 160,000 in the number of workers on US nonfarm payrolls in August, up from July's 114,000 increase. Markets are currently pricing in around 100 basis points worth of rate cuts from the Federal Reserve over the remainder of this year.
Friday's employment data could determine whether the Fed cuts by a quarter point next week, or by an outsized half point. — Reuters