A weak jobs figure out of the United States allowed GBP to rampage higher against the USD on Friday as the market began to look forward to the Obama Administration’s stimulus package due for release today. Non-farm payrolls lost the most jobs in one month since 1974 as the figure shifted to 598k, a lot more than the 500k predicted and beating our predictions of 528k. The unemployment rate surged to 7.6%, a level not seen since 1992 versus 7.2% in December.

President Obama told reporters on Friday afternoon that ‘these numbers demand action’ and warned Congress that dragging feet would lead to ‘devastating job reports like today’s month after month, year after year’. So much for the politics of hope, eh Barack? Saying that, most economists , this one included, believe that this quarter could be the worst as far as jobs figures for the US go however there will be figures worse than today’s.

Equity markets were higher somewhat surprisingly as investors and speculators anticipated a swift resolution to the latest round of political squabbling in Washington’s corridors of power over the bank bailout package. Press reports indicated on Friday that an announcement from newly installed Treasury Secretary Tim Geithner would be forthcoming today although reports over the weekend state that this may have to wait until Tuesday. Any indecision on the US government’s part will raise risk aversion and could see sterling’s recent gains slip away.

The data calendar is fairly light today, we have already had the RICS price data survey for January which showed that commercial property prices plunged in January.

Further analysis of sterling and its prospects are available on our video blog http://uk.youtube.com/user/WorldFirstJC

Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our: Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080. Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.

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