Sterling’s aggressive sell off continued on Friday as the Pound hit a five-week low against the Dollar. This is a direct result of the Bank of England ‘s decision to keep interest rates on hold, despite inflation being 1.1% over the BoE’s target of 2%. Before the Monetary Policy Committee’s meeting on Thursday, the market “had priced in a 15 basis point rise in rates”, thus the decision to keep rates at a record low of 0.1% came as a surprise to many. Bailey argued on Friday that the central bank wanted to see “how the jobs market manages with the end of the furlough scheme”. Bailey said “the labour market looks tight, but the missing piece of evidence is what has happened to unemployment since the scheme finished”.
Despite experiencing a tough session on Friday, GBPUSD was able to make minor gains on the day. The pair opened at 1.3452 and close closed at 1.3504.
Supporting the Dollar on Friday was better than expected Unemployment Rate and Non-Farm Payrolls. NFP “posted their biggest jump in a single month since July”, with the final reading coming in at 531K against a forecasted 450K. Unemployment also printed a figure 0.1% better than expected at 4.6%. Though payroll figures have grown in every month so far in 2021, the economy “remains more than 4 million jobs short of its pre-pandemic levels following plunges in employment between March and April of 2020”. With nearly all restrictions lifted a “broad range of industries” were expecting a pickup in hiring in October, but as “employers saw an especially pronounced boost as concerns over the Delta variant receded and enabled more service employees to return to work”.
After the pairs decline on Thursday, GBPEUR started the session Friday at 1.1648, and closed at 1.1678.
EURUSD had a flat session on Friday. The pair opened at 1.1548 and close 2 pips below at 1.1546.