On Friday, the US released their latest Non-Farm Payroll numbers which disappointed as only 20k jobs were created. The US dollar lost value across the board for a short period but recovered by the close of business. The reason the US dollar recovered is because the numbers released were to be expected as the numbers are skewed due to the US Government shutdown. Furthermore, during the month before (January) 311k jobs were created which was fantastic news for the US economy.
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Also, on Friday wage growth numbers rose by 0.4% for the month to 3.4% and Unemployment fell to 3.8% from 4%. Past history tells us when unemployment is falling and wages are rising, this could be a cue for the Central Bank to hike interest rates. If the numbers continue to impress further interest rate hikes could be on the horizon which could be positive for clients selling US dollars.
With only 20 days to go until the date the UK is supposed to start the transition period and leave the EU, this week is arguably the most important week for the pound since the UK voted out of the EU in 2016. Another meaningful vote will take place on Tuesday. If MPs have not been persuaded to vote in favour of the PM, MPs will be back to the Commons on Wednesday to vote on whether the UK should crash out of the EU. Over the last 6 months we have been told repeatedly that there isn’t the appetite for a crash out Brexit therefore if it’s not supported MPs will return on Thursday to vote on extending Article 50.
Since Brexit cable exchange rates have fluctuated over 20 cents therefore this week could have a major influence on the direction of this pairing for the years to come. If the PM manages to secure a deal, the pound could strengthen, however any other scenario could put pressure on the pound.
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