During Friday’s trading session the GBPUSD exchange rate hit its lowest level seen since June 2010 following the release of US Non-Farm Payroll data. The figures were much higher than expected with 236,000 jobs created compared to expectations of a rise of 165,000. Unemployment in the US is now the lowest since December 2008 and is currently sitting at just 7.7%.
The Dollar strengthened by almost 2 cents against Sterling and over 1% on EURUSD so anyone with a requirement to sell US Dollars may be interested in taking advantage of the recent movement. Having now broken through the support levels on GBPUSD of 1.50 we could see Dollar strength continue for the early part of this week before the markets settle down again
This quarter is a crucial period for both the UK and more importantly Sterling. With Q4 2012 showing negative growth if the figures published once this quarter is complete as negative we will be entering a triple dip recession, the first time in history.
This does not make good reading for anyone with Sterling to sell. It could be argued that behind the scenes the Bank of England’s comments over the last few months have driven down the Pound to create an export led recovery. By weakening Sterling this creates more demand for British exports, which helped the country, recover the last time GBPEUR almost hit parity.
Recently the Office for Budget Responsibility has said it is worried about the government’s austerity measures and how they will impact growth. If the measures the government have previously put in place affect growth this could also damage the hopes for the Pound. To be kept up to date with how events will affect exchange rates contact me directly Tom Holian [email protected]