The first Friday of every month draws all eyes to the US and the release of the non-farm payroll, important employment data which reflects the health of the US economy. If the number released at 13:30 GMT is below the census, cable could push on and make ground towards and even through the 1.30 level again. As we have said many times, this is a key psychological level within the market.
The sentiment of USD has been flipped on its head since the global knock-on effects of the Coronavirus outbreak have affected financial markets and hit supply chains. After the US’ surprise 50 basis point rate cut three days ago, the futures market is now fully pricing in another 50 basis point interest rate cut at the next Fed meeting on the 18th March.
Sterling appears to still be moderately supported against a host of currencies, as the soon to be chairman of the Bank of England, Andrew Bailey, has said the central bank would require more evidence of the Coronavirus outbreak having a strain on the economy. As in January, we are now seeing traders price in a 50/50 chance of a rate cut happening come the next BOE meeting on the 26th March.
All of the above has put the Brexit negotiations on the back burner of front-page news, which was expected to be the big focus points of GBP pairs.
Have a good weekend,
Author: Jack Nicholls, Relationship Manager
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