Daily digest market movers: Pound Sterling turns sideways after strong rally
- The Pound Sterling vs. US Dollar trade is broadly stable after rallying to the round-level resistance of 1.2800. Investors are expected to remain on the sidelines ahead of the crucial United States Employment data for February.
- Economists anticipate that US employers added 200K jobs, lower than the robust hiring of 353K seen in January. The Unemployment Rate is anticipated to remain unchanged at 3.7%. Investors will also focus on the Average Hourly Earnings data, which will provide more cues on the inflation outlook.
- Investors should be prepared for highly volatile action as a drastic change in US employment numbers would influence market expectations for the Federal Reserve rate cut in the June policy meeting. Expectations for a rate-cut decision in June remain firm as Fed Chair Jerome Powell sounded less hawkish in his two-day testimony before Congress.
- The GBP/USD pair is set for weekly gains, mainly due to the weak appeal for the US Dollar. Next week, the Pound Sterling will be guided by the UK’s labor market data for three months ending in January, which could provide some cues about when the Bank of England will start reducing interest rates. Currently, market expectations for a rate cut point to the August meeting.
- BoE policymakers have refrained from specifying any time frame for lowering borrowing costs, saying that cuts are not appropriate until they get confidence that inflation will return sustainably to the 2 % target.
- Meanwhile, UK house prices have risen for a fifth straight month due to a recent fall in mortgage rates and expectations that rate cuts are around the corner. The mortgage lender Halifax reported that house prices rose by 0.4% in February on a month-on-month basis.
Edited 10 Mar 2024, 21:43
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