GBP/USD Outlook: Pound Sterling Flat vs US Dollar following US ADP Employment Change

October 3, 2024 - Written by John Cameron

STORY LINK GBP/USD Outlook: Pound Sterling Flat vs US Dollar following US ADP Employment Change

The Pound US Dollar exchange was trapped in a narrow range on Wednesday following the publication of some mid-tier US employment data.

At the time of writing, GBP/USD was trading at approximately $1.3267, virtually unchanged from the start of Wednesday’s session.

The US Dollar (USD) managed to stay above ground against most of its counterparts on Wednesday despite a return in risk appetite, buoyed by the publication of some robust mid-tier jobs data.

The most recent ADP employment change exceeded expectations in September, with the figure climbing to 143,000, up from a previous 99,000 and surpassing the projected 120,000.

This timely labour market data, arriving just ahead of the anticipated non-farm payrolls report scheduled for release on Friday, dampened expectations for a Federal Reserve interest rate cut, thereby strengthening the ‘Greenback’.

The Pound (GBP) remained subdued against most of its counterparts on Wednesday with a dearth of fresh economic triggers leaving the currency largely rudderless.

Compounding the GBP's struggles were escalating concerns about the UK's imminent Autumn Budget, set to be unveiled later this month.

Investors are becoming increasingly jittery amid reports of a £22bn gap in public finances left by the previous Conservative government. Market participants fear that the Chancellor may implement a range of tax hikes and spending cuts to tackle this
deficit, thereby hindering any significant advancements for GBP.

Looking forward to Thursday, the main driver for the Pound US Dollar exchange rate is anticipated to be the release of the latest ISM services PMI from the US, alongside the UK's own services PMI data.

In the UK, the crucial services sector is projected to show a modest decline, with the index expected to dip from 53.7 to 52.8. Nevertheless, since this figure remains comfortably above the 50 mark indicating expansion, the GBP exchange rates may
gain strength following the announcement.

Meanwhile, the US services index is predicted to rise, with expectations of an increase from 51.5 to 51.7, potentially reinforcing USD exchange rates

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TAGS: Pound Dollar Forecasts