The dollar pulled back significant ground on Friday after Non Farm Payrolls and Employment data came out way above expectations.
Economists had expected a rise of 170,000 however the number posted was 517,000, analysts were left stunned by the figure however there was a benchmark revision in place from the Establishment survey which generates the figures.
One economist stated, ‘As a result, although the report at face value supports the Fed’s plans to hike interest rates twice more over the next few months, it underlines our belief that core inflation can continue to fall sharply even without a significant weakening in labour market conditions."
The Dollar strengthened sharply after the data with GBPUSD falling from around 1.22 to low 1.20’s, and briefly dipping below 1.20 yesterday as the markets continued to digest. Against the Euro the pair fell from 1.09 to 1.0723.
This morning the pound received a boost after The National Institute of Economic and Social Research (Niesr) said the economy will grow marginally despite high prices hitting household budgets. But it warned while the UK may not fall into recession, it will feel like one for at least seven million households.
The pound rose this morning after the news breaking back above 1.21 against the dollar, and moving to around 1.1250 against the Euro.
The next couple of days will see some important news for the UK with the BOE monetary policy hearing results tomorrow at 09.45, and GDP figures for Q4 on Friday at 7am.
