Pound to Dollar Rate Awaits Influential US Payrolls Report

The pound was floating around 1.36 against the dollar on Thursday. The UK currency’s prospects of settling above the resistance level were boosted early in the day by the Halifax House Price Index for September. According to the mortgage lender, house prices rose by 1.7% month-over-month compared to economists forecast of 1.2% growth. On a year-over-year basis, house prices increased by 7.4%.

By this morning, the pound vs dollar rate had managed to settle just above the 1.36 level.

Jobless claims record sharp decline

Falling stock markets and rising energy prices are creating accommodative market conditions for the dollar. Global stock markets have fallen sharply this week and remained jittery on Thursday, prompting the safe-haven dollar’s favourite market conditions: a risk-on mood.

Applications for US state unemployment benefits fell sharply last week to the lowest level in a month, indicating ongoing improvement in the labour market as enhanced federal unemployment benefits are reeled in.

Initial unemployment claims in regular state programmes totalled a seasonally adjusted 326,000 for the week ended 2 October, a drop of 38,000 from the previous week, Labor Department data showed on Thursday – well below the 350,000 applications economists forecast. Continuing claims – which run a week behind and measure people that have filed for at least two weeks of benefits – also registered a healthy decline, dropping 97,000 to 2.71 million.

Looking ahead

There are no material stats scheduled from the UK economy to provide the pound with direction today.

The Bank of England (BoE) Financial Policy Committee (FPC) minutes – a detailed account of the FPC’s latest meeting – are released today. The report, which is released quarterly, provides in-depth insights into financial conditions in the UK and decisions surrounding financial stability. This will be accompanied by an official statement from the FPC, which includes detailed analysis of the stability of the financial system, an assessment of potential risks to the economy, and recommendations to protect and enhance economic resilience in the UK.

The Quarterly Bulletin is released by the BoE today, providing insights into market developments and UK monetary policy operations. It also contains research, analysis and reports on a wide range of topical economic and financial issues, both domestic and international.

It’s a big day ahead in the US, with investor attention firmly focused on the Labor Department’s Nonfarm Payrolls report for September. Economists expect the data to show an increase of 5000,000 jobs and an unemployment rate decline to 5.1%. If this plays out the dollar could rally, and the Federal Reserve will come under further pressure to rein in its stimulus programme.

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