The Easter bank holiday left the pound to dollar rate largely rangebound on Friday. Without any data scheduled for release from the UK economy, the pair moved sideways before settling at 1.383 for the weekend. The UK’s strong vaccination drive – which has administered a second jab to more than five million people – appeared to cancel out upbeat US data as the week ended.
The world’s largest economy created more jobs than expected in March as US nonfarm payrolls surged by 916,000 – the largest gain since last August. Economists had forecast payrolls increasing by 647,000 jobs last month. Data for February was revised higher to 468,000 jobs created from the previously reported 379,000.
This caused the US unemployment rate to fall to a fresh pandemic low of 6% from 6.2% in February. Friday’s report from the Labour Department showed the nation’s jobs market is on a steady path to recovery.
There was further evidence yesterday of a roaring US economy that is being boosted by increased vaccinations and huge fiscal stimulus. An upbeat survey from the Institute for Supply Management showed that its non-manufacturing activity index rebounded to a reading of 63.7 last month – the highest in the survey’s history amid robust growth in new orders. The services sector, which accounts for more than two-thirds of US economic activity, had been forecast to expand from 55.3 to 59.0 in March.
The IHS Markit’s Services PMI also showed a surge in economic activity in the sector, rising to 60.4 in March from 59.8 – expanding at its strongest pace since July 2014. Furthermore, the Composite PMI rose to 59.7 in March, compared to predictions of 59.1.
Despite signs of a robust US economic recovery, the dollar sunk in value yesterday as it moved in line with a retreat in Treasury yields from recent peaks. By this morning, the pound vs dollar rate had jumped above 1.39 for the first time since 19 March.
The UK’s economic calendar finally creaks back into life tomorrow after the Easter weekend, with the release of the Markit Services PMI for March, which is forecast to hold steady. This is followed by the Markit Construction PMI on Thursday, during what is an extremely quiet week on the data front in the UK.
A slow day in the US calendar today is followed by the publication of the minutes from the latest Federal Open Market Committee meeting tomorrow. This will outline the Federal Reserve’s stance on key monetary policy issues such as interest rates.
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