Sterling dropped almost a cent against the dollar this afternoon despite a run of positive data and no major surprises from the Bank of England (BoE) monthly meeting. The day started out well for the pound as the GBP/USD cross broke through $1.56 to reach a high of $1.5666. However, the gains were short lived as some positive news for the U.S and comments by ECB Chairman Mario Draghi saw the dollar recover to bring exchange rates back down to a low of $1.5576. For more information on live market prices click here.
After yesterdays excellent service sector figures, which saw the sector grow at it fasted pace for over six years, Sterling was in a strong position as BoE Governor Mark Carney and his fellow MPC members met for their monthly meeting. Since Mr Carney issued his forward guidance last month there was never a chance that interest rates would be changed and as expected this was the case. There was also no change to the existing Quantitative Easing programme and the news pushed the pound up by over half a point against the dollar to leave us close to the $1.57 mark we witnessed briefly on the 21st August.
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As I have already mentioned though the gains did not last for very long. U.S unemployment figures released this afternoon came in better than forecast with 9000 fewer people now filing for
unemployment and coupled with Mario Draghi saying that interest rates in the Eurozone will remain at their current level or lower for an extended period the dollar managed to claw back the ground it lost over trading this morning.
All eyes will now turn to tomorrow and the U.S non-farm payroll numbers. This will show us how many jobs were created in the States during August and a positive reading could add to speculation that the U.S Federal Reserve will look to begin tapering sooner rather than later. A positive reading tomorrow will immediately strengthen the dollar and push exchange rates lower, it is forecast that 177K jobs were created last month but if the actual figures comes in closer to 200K then I would not be surprised to see GBP/USD exchange rates drop back towards $1.5450.
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