Good afternoon.
The New Year has not started well for the pound especially against the U.S. dollar. Since the Federal Reserve raised its benchmark rate last month GBP/USD has been on a downward trend which at the moment shows no signs of stopping.
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During today's session the GBP/USD cross fell to its lowest levels since 2010 with the currency pair falling as low as $1.4602. It means the pound has now lost over 4% against the dollar since the 13th December when the mid-market price was sitting at $1.5232 as the graph below shows.
Why has the GBP/USD rate fallen today?
The dollar added to its recent gains today after a private report from the U.S. showed that companies had added the most jobs in year last month. ADP a payrolls processor said that employment in the private-sector has risen by 257,000 in December, the sectors largest gain since December 2014.
The report lends extra support the U.S. Federal Reserve will continue raising interest rates throughout 2016 and with the central bank set to release the minutes from their December meeting later this evening the dollar could be set for further gains.
If the minutes give any indication of when the next rate hike may take place we could see investors head towards the dollar in preparation of any announcement.
Jobs day!
On Friday the U.S. will release the official job numbers know as non-farm payroll. The job numbers usually cause a fair amount of volatility in the FX market. So if Friday's reading backs up the job report today we could also see the dollar benefit.
If there is a hawkish tone to the meeting minutes and positive jobs number on Friday I for one would not be surprised to see GBP/USD fall below $1.45 by the end of the week. At the moment I cannot see the pound recovering in the short term so unless something drastic happens we could GBP/USD remain in the $1.40's for some time.
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