– Written by
Frank Davies
STORY LINK GBP/USD Forecast: Could Rising UK Unemployment Push Sterling Lower?
The Pound US Dollar (GBP/USD) exchange rate fell on Monday, with expectations of a Federal Reserve interest rate hike this week lending support to the ‘Greenback’.
At the time of writing, GBP/USD was trading at $1.3473, down 0.4% on the day.
The US Dollar (USD) gained ground on Monday as traders moved into the ‘Greenback’ ahead of the Federal Reserve’s interest rate announcement on Wednesday evening.
The prospect of an interest rate hike from the Fed, which markets widely anticipate at this week’s meeting, helped bolster demand for the US currency.
The safe-haven US Dollar also benefited from growing risk aversion.
Tensions in the Middle East intensified as Yemen’s Houthi rebels stepped up attacks on Saudi Arabian energy infrastructure, unsettling financial markets.
The Pound (GBP) struggled for direction on Monday, with Sterling traders keeping their powder dry ahead of a packed week of UK economic developments.
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With few domestic releases expected to influence trading at the start of the week, focus shifted towards the heavier run of data and events ahead.
Among the key releases on the agenda were the latest UK labour market figures, consumer price index, Bank of England (BoE) interest rate decision and retail sales data.
With several potential catalysts approaching, GBP traders were reluctant to take sizeable positions.
This left the Pound subdued as the new trading week got underway.
Near-Term GBP/USD Forecast: UK Jobs Figures to Weigh on Pound?
Looking forward, Tuesday’s UK employment figures are set to give Sterling its first major test of the week, as traders assess what the data could reveal about the strength of the labour market.
UK unemployment is forecast to edge higher from 4.9% to 5% in the three months to July, while wage growth including bonuses is expected to have slowed over the same period.
Signs of a weakening jobs market could put further pressure on the Pound, particularly with the Bank of England’s interest rate decision due later in the week.
Across the Atlantic, the US economic calendar is relatively quiet on Tuesday.
This could leave USD more exposed to shifts in risk appetite, with a risk-off environment potentially providing support for the ‘Greenback’.
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TAGS: Pound Dollar Forecasts
