The British pound has posted slight gains on Monday, erasing the losses seen on Friday. In North American trade, GBP/USD is trading at 1.3571, up 0.29% on the day. British banks are closed for May Day, and there are no British releases. It’s a quiet day in the US, with no major events. On Tuesday, the US releases PPI and JOLTS Job Openings. We’ll also hear from Federal Reserve Chair Jerome Powell, who will speak at an event in Zurich.
It has been a rough run for the British pound, which posted a third consecutive losing week. The pound has slid 4.9% since mid-April, and GBP/USD dropped below the 1.35 line on Friday for the first time since early January. In addition to a broadly stronger US dollar, recent weak British numbers have soured sentiment towards the pound. Preliminary GDP for the first quarter missed the forecast with a negligible gain of 0.1%, and Manufacturing and Services PMIs also fell short of their estimates. The soft data has also drastically lowered expectations that the Bank of England will raise interest rates on Thursday. Most analysts expect the BoE to delay a hike until the second half of the year, with August or November being the most likely months for a rate hike.
In the US, job numbers were a mixed bag on Friday. Nonfarm payrolls rebounded with a gain of 164 thousand, although this fell short of the estimate of 190 thousand. Wage growth dropped from 0.3% to 0.1%, missing the estimate of 0.2 percent. There was some good news from the unemployment rate, which dropped to 3.9%, beating the estimate of 4.1%. The Fed will likely be pleased that nonfarm payrolls were not red hot, as they April report justifies its policy of gradual rate hikes.
