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GBP strength despite worrying data

GBP strength despite worrying data

Last week, the main focus was on Friday’s US labour market figures for September including the headline payroll number which disappointed versus expectations, coming in at an underwhelming rise of just 194k vs 500k forecast. Despite this, there was minimal impact on the dollar.

Overall, we saw fairly tight ranges over the week although the euro did remain on the defensive somewhat, with EUR/USD trading down at a year-to-date low of $1.153. We saw sterling hold a firmer stance with the expectation of the BoE hiking interest rates in early 2022. In terms of the key sterling pairs, EUR/GBP fell below 85p, while GBP/USD regained the $1.36 level.

In overnight action, the yen has weakened with USD/JPY in the upper half of ¥112-113, and during early trading this morning we are seeing some sterling strength across the board.

As we look to the week ahead, there are few data highlights for the euro, however, there is a busier calendar in the UK for sterling traders including GDP and labour market updates for August. Meanwhile, the key noteworthy releases for the dollar this week are the CPI and retail sales figures for September.

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