GBP/USD exchange rates spiked this afternoon to reach the highest level we have seen since the 2nd October. Following the release of the latest U.S. job numbers the dollar quickly lost value pushing cable up by nearly a cent to reach $1.6226, meaning Sterling has now gained around 2% against the dollar since last Wednesday.
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Today was an important day in the U.S. as we finally got to see the job numbers from September, they should have been released at the start of this month but due to the government shutdown the majority of data releases were delayed. The non-farm payroll numbers usually cause some big swings in the FX markets and todays result was no exception.
It had been predicted that 182,000 jobs were created last month but the actual figure (released at 13:30 BST) came in well under the forecast rate, only 148,000 new jobs were created and the result had an immediate impact on the dollars performance (as the graph below shows). In a matter of seconds GBP/USD climbed from $1.6125 to $1.6207 before gradually climbing over the rest of the afternoon.
So what does this mean for the U.S.?
We are still waiting to see what result the shutdown will have on the U.S. economy, this will become clearer over the next few weeks as we start to see the data for October being released. What todays job numbers will do is put any chance of the Federal Reserve cutting back their continuing Quantitative Easing programme in the immediate future on hold. It means the dollar will remain weakened and if the shutdown has had a negative impact on the economy we could see the dollars value depreciate even further.
Over the next few months there are going to be some major announcements in the States, so the volatility we have seen in recent weeks is sure to continue. As I have already mentioned we will start to see the results of the shutdown, Ben Bernanke is stepping down as FED chairman with Janet Yellen ready to take over and lets not forget that the deal to raise the U.S. debt ceiling was only a temporary one and could well lead to another stand-off between the Democrats and Republicans.
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