Six consecutive months of Jobs Growth in the US economy

Sterling edged up after hitting a 2 week low against the dollar last week, but remained vulnerable along with other riskier currencies due to uncertainty over Greece's progress in completing a debt restructuring deal. With a surprise fall in UK house prices and a sluggish retail sales report adding to a global drop in demand for perceived riskier currencies on Tuesday Sterling retreated back towards the 2 week low.

An absence of UK data mid-week kept GBP/USD rates open to swings in risk sentiment but fortunately rates remained relatively flat. Analysts suggested that cable’s 1.60 level looked like the peak of the recent recovery and risk is now building for a deeper break to the downside, Positive data surprises from the UK have provided some support of late but the domestic economic picture could start to run out of steam and sterling may be back under pressure.

To end the week the Dollar climbed against Sterling to levels last seen in early to mid February after key U.S. jobs data (Non-Farm Payrolls) beat expectations with 6 consecutive months of jobs growth, providing a further sign that the recovery of the world's biggest economy is becoming more sustainable. This also suggested there would be less need for further monetary stimulus from the Federal Reserve which raised hopes that an improving U.S. economy will boost the global economic outlook.

So far the key driver in the GBP/USD rates of late has been risk sentiment. Worries over Europe and its ability to deal with its massive debt problems have never really left the headlines but another factor to consider is the developments in the Middle East in particular the standoff with Iran. Oil prices have risen over 7 per cent in a very short space of time due to the tensions in the region, although historically USD/Oil have an inverse relationship (higher Oil price- weaker USD, and vice-versa) the solid economic results from the US and Europe’s debt issues have driven risk aversion with larger flows into the dollar keeping it supported against its counterparts including Sterling.

There are several volatile factors, economic and otherwise influencing GBP/USD rates, if you have an impending currency requirement the best tool at your disposal to navigate the uncertainty is to contact me using the contact form on the homepage of the blog or click here to send me a direct email.