Pound to US Dollar forecast: How will Non-Farm Payroll data affect GBP/USD exchange rates?

Pound to US Dollar forecast: How will Non-Farm Payroll data affect GBP/USD exchange rates?

Will Non-Farm Payroll data affect the pound to US dollar forecast?

Today is a key date in the economic calendar with the latest US Non-Farm Payroll data released. Due on the first Friday of every month, the information relates to the changes in on-agricultural employment in the United States. It is highly regarded as a key barometer of the US labour market and will provide us with insight into the latest developments in the US economy. Expectations are for the data to show a drop from 263k new jobs created in April, to 185k new jobs created in May.

Will the US dollar weaken further?

The US dollar has been fractionally weaker as there is mounting expectations the next move from the US central bank will be an interest rate cut sooner or later. The exact timing of this is unknown but with global growth having slipped according to most forecasters expectations, there is a growing concern that the next move will be an interest rate cut from the US central bank.

Expectations in the future for the global economy could weigh heavily on the US dollar as the threat of trade wars and other concerns begins to maker investors think twice about the currency. Whilst the US dollar does seem likely to remain strong overall, there is a belief that in the future if the US central bank do cut rates, the US dollar will weaken.

Today’s Non-Farm Payroll data will be key in shaping the expectations for GBP/USD exchange rates which is linked to the US economy, and closely linked to the behavior of the US dollar. There is a clear link between the outcomes from the data today and performance of GBP/USD rates. It might be that we see the US dollar lose some value if the Non-Farm Payroll data shows further signs that the US economy is slowing down.

Brexit still affecting pound to US dollar forecast

Pound to US dollar exchange rates will also continue to be dictated by the outcomes of the Brexit, with investors eagerly awaiting signs of who will be the next Conservative leader. All in all, the contest is not expected to end until July but further news here will of course shape pound exchange rates. With the US dollar appearing to have peaked, and much of the bad news priced in on the pound, we might now expect GBP/USD exchange rates to oscillate in a range between 1.26-1.28 for the next week.

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