Pound to US Dollar exchange rate outlook: Non-Farm Payroll the focus ahead

Sterling reaches 11 week high against the US Dollar

Is the US economy in decline?

Pound to US dollar exchange rates have slipped below the more recent highs of 1.2579 seen on the 20th September, as investors brace themselves for further developments on Brexit and also try to better understand the direction of the US economy. Today is the key US NFPR (Non-Farm Payroll) data release, which can be a market mover owing to the lack of clarity about what the final numbers can be.

Sterling has been in the focus this week with the release of Boris Johnson’s Brexit plans, with added focus on a solution regarding the Irish border. Whilst given the backing by some in Northern Ireland and the Conservative and even Labour Party, the EU and Ireland have already sought to reject the plans.

EU Summit planned for the 17th October

Expectations for sterling continue to factor in the mixed picture for the outcome on Brexit, as investors await further news in October. The EU Summit is planned for the 17th and 18th October and is penciled in as a key time where a deal might be thrashed out.

For GBP/USD exchange rates, the NFPR data will be seen in the light of how likely any future interest rate cuts are. The US Federal Reserve has been preparing for interest rate cuts, in the face of increasing uncertainty that the global and US economy is in decline.

The US currency can behave in different manners according to sentiments on the global economy. Whilst the cutting of interest rates would generally be seen as negative for the currency concerned, by cutting interest rates the US economy could remain more healthy (promoting a stronger dollar) as it is prolonging this economic cycle.

GBP/USD interbank rates are trending at 1.2344 at the time of writing, for more information on the markets or strategy to maximise your transfers please get in touch via the form below.