Good morning,

As with every first Friday of the month, the markets turn their full attention to the US non-farm payrolls figure, which is due to be released at 13.30 this afternoon. Whilst it can be argued that this data is arguably the most market-moving out of all USD releases; additional focus will come in the shape of possible October interest rate cuts, which could see the dollar end an already tough week very badly.

At 19.00, after the European session closes, the chair of the Federal Reserve, Jerome Powell, will give his verdict on the short-term health of the USD in the face of the global slowdown caused largely in part by the trade war between the USA and China.

Whilst President Trump will likely be elated by a weaker dollar, this jubilation is unlikely to be shared much by the US population, especially if this week’s manufacturing figures are anything to go by. Sentiment in the manufacturing sector has fallen to its lowest level in 10 years, which in turn tipped the S&P 500 stock market index down 4.6%; coupled together, these are tell-tale signs of a looming US recession.

In the UK, Prime Minister Johnson’s new backstop proposals were received coolly by the EU, with Donald Tusk noting that they were “Open, but unconvinced” by the new plans. Despite this, sterling continued to climb for the day, as the proposals were welcomed far more warmly by Parliament – with harder Brexit-leaning MP’s coming back into the fold to support the PM.

Weekly moves

GBPUSD rebounded from its tumble to monthly lows of 1.2206 on Monday to climb back above the 1.2325 mark. To stay above and push on from this, a poor US payroll figure and continuing parliamentary complicity with regards to the new Brexit plans need to work in tandem to look for 1.2375 and beyond.
GBPEUR has endured a far choppier week, opening the week by falling to 1.1195 before rebounding 1.01% to highs of 1.1300 yesterday. These drastic swings are likely to grow in number as the UK approaches the EU summit on the 17th and the Brexit date of 31st.

Have a great weekend,

Author: Joshua Haden-Jones, Senior Private Relationship Manager