Pound to Dollar Rate Recovers Losses
The pound was poorly positioned on Friday morning having fallen from the cusp of the 1.42 level to 1.40 against the dollar, before recovering its losses on the back of soft US data. This change in fortunes was triggered by the release of a softer than expected Nonfarm Payrolls report from the US Bureau of Labour Statistics. The US economy gained more than half a million jobs in May, with employment gathering pace from April, but missed economists’ forecasts despite the jobless rate – which fell to 5.8% in May from 6.1% the previous month – recording a new pandemic-era low.
US nonfarm payrolls rose by 559,000 last month, versus 650,000 expected, while new orders for goods produced in the US fell more than expected in April. Factory orders dropped 0.6% in April having increased 1.4% in March, the Commerce Department said on Friday – economists had forecast that they would slip 0.2% – while orders surged 14.2% on a year-on-year basis.
UK Construction Reaches a 7-year High
The pound received a further data boost on Friday from the only economic report slated for release from the UK economy. The IHS Markit/Cips purchasing manager index (PMI) for the construction sector surged to 64.2 last month, up from 61.6 in April – which represented its strongest move higher in almost seven years. The PMI surpassed economists’ forecasts of a rise to 63.2 and remained well above the 50 barrier which indicates the sector is demonstrating signs of expansion.
UK construction recorded a rapid acceleration in growth in May, fuelled by strong demand for new housing. However, concerns are mounting that strangled supply chains could restrict activity in the long term.
Construction companies ascribed the surge in activity to strong demand for residential building work following the introduction – and extension of – a stamp duty holiday during the Covid-19 pandemic, which does away with tax for home buyers on their first £500,000 spent.
Looking Ahead
The British Retail Consortium Like-For-Like Retail Sales is scheduled for release this evening. Investors in the pound must wait until Friday for the next releases of note from the UK economy when a raft of data hits the headlines, including: Manufacturing Production, Industrial Production, and Gross Domestic Product.
A quiet start to the week in the US economic calendar means tomorrow’s Goods and Services Trade Balance figure for April is the first significant release from across the pond. Things ramp up on Thursday when the Consumer Price Index and Initial Jobless Claims hit the headlines.
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The post Pound to Dollar Rate Recovers Losses appeared first on Pound Sterling Forecast.
Source: https://www.poundsterlingforecast.com/2021/06/pound-to-dollar-rate-recovers-losses-2/
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