- The Pound Sterling rises against its major peers after the UK budget announcement.
- Traders pare back BoE interest-rate cut bets due to upwardly revised inflation forecasts.
- In the US, investors expect the NFP report to show lower labor demand in October.
The Pound Sterling (GBP) edges higher to near 1.3000 against the US Dollar (USD) in Thursday’s London session. The GBP/USD pair gains as the US Dollar drops ahead of a slew of United States (US) economic data to be announced on Thursday and Friday. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, tests the 104.00 region.
The US Dollar falls slightly as lower-than-expected US GDP growth in the third quarter offset a surprisingly upbeat ADP Employment data for October. ADP data showed that private payrolls came in significantly higher at 233K against 159K in September.
For more cues on the current status of the job market, investors will pay close attention to the US Nonfarm Payrolls (NFP) data for October, which will be published on Friday. The NFP report is expected to show that the economy added 115K workers, lower than 254K jobs created in September. The Unemployment Rate is expected to remain steady at 4.1%.
Signs of slower job growth would prompt Federal Reserve (Fed) dovish bets, while robust figures would weaken them. According to the CME FedWatch tool, the central bank is expected to cut interest rates by 25 basis points (bps) in both of the policy meetings to be held in November and December.
In Thursday’s session, investors will focus on the US Personal Consumption Expenditure Price Index (PCE) data for September, which will be published at 12:30 GMT. The core PCE inflation, which is the Fed’s preferred inflation gauge, is estimated to have grown by 2.6%, down from 2.7% in August.
Meta Title: Daily digest market movers: Pound Sterling outperforms its major peers
- The Pound Sterling outperforms majority of its peers on Thursday as traders have pared back bets that the Bank of England (BoE) will cut interest rates aggressively after the United Kingdom (UK) Labour government announced its first Autumn Forecast Statement on Wednesday.
- The budget presentation from UK Chancellor of the Exchequer Rachel Reeves was filled with the biggest tax increase in almost three decades to repair the hole in public services, which she referred to as “inheritance from Conservatives”.
- The major highlight of the UK budget was the collection of taxes worth 40 billion pounds through an increase in employers’ contribution to National Insurance (NI), higher duty on alcohol and tobacco, and a sharp increase in Capital Gains Tax. Reeves allocated higher spending to various areas such as the National Health Service (NHS), affordable housing, funding duty freeze on fuel, and setting up green hydrogen projects.
- Meanwhile, the UK’s Office for Business Responsibility (OCR) has upwardly revised inflation forecasts for 2024 to 2.5% from 2.2% projected in March, a revision that also led traders to expect less interest rate cuts by the BoE. The agency also revised inflation forecasts for 2025 significantly higher, to 2.6% from 1.5% previously anticipated.
- Going forward, investors will shift focus to the BoE monetary policy meeting, which will be announced on November 7. The BoE is expected to cut interest rates by 25 basis points (bps) 4.75%, according to an October 22-28 Reuters poll.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.20% | -0.64% | 0.15% | 0.10% | 0.06% | -0.12% | |
| EUR | 0.14% | -0.06% | -0.51% | 0.29% | 0.24% | 0.19% | 0.02% | |
| GBP | 0.20% | 0.06% | -0.46% | 0.35% | 0.30% | 0.25% | 0.08% | |
| JPY | 0.64% | 0.51% | 0.46% | 0.78% | 0.75% | 0.64% | 0.51% | |
| CAD | -0.15% | -0.29% | -0.35% | -0.78% | -0.03% | -0.10% | -0.26% | |
| AUD | -0.10% | -0.24% | -0.30% | -0.75% | 0.03% | -0.05% | -0.24% | |
| NZD | -0.06% | -0.19% | -0.25% | -0.64% | 0.10% | 0.05% | -0.17% | |
| CHF | 0.12% | -0.02% | -0.08% | -0.51% | 0.26% | 0.24% | 0.17% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Technical Analysis: Pound Sterling wobbles near 1.3000
The Pound Sterling struggles to break above 1.3000 decisively against the US Dollar. The near-term trend of the GBP/USD pair remains uncertain as it stays below the 50-day Exponential Moving Average (EMA), which trades around 1.3060.
The GBP/USD pair continues to put efforts to hold the lower boundary of a Rising Channel chart formation around 1.2900 on the daily time frame.
The 14-day Relative Strength Index (RSI) strives to hold above 40.00. A fresh bullish momentum would trigger if it manages to do so.
Looking down, the 200-day EMA near 1.2845 will be a major support zone for Pound Sterling bulls. On the upside, the Cable will face resistance near the 50-day EMA around 1.3060.
Economic Indicator
ADP Employment Change
The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.
Last release: Wed Oct 30, 2024 12:15
Frequency: Monthly
Actual: 233K
Consensus: 115K
Previous: 143K
Source: ADP Research Institute
Read the full article here
