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Sterling climbs after inflation report

The pound is higher versus the US dollar after the UK inflation expectations increased.

The GBP/USD pair is trading a $1.6357; up 0.15% after the British consumer inflation expectations report increased from 3.2% to 3.6% on the quarter. The data shows that the Bank of England’s stimulus package has paid off.

Traders are now waiting anxiously for the non-farm payrolls and unemployment data from the US at 1.30pm (London time). The consensus expectation is for an increase of 185,000 new jobs to be created, and for the unemployment rate to drop to 7.2%. During the week, the ADP employment figure and jobless claims both exceeded estimates, and traders are now wondering whether today’s jobs data will exceed the consensus.

If the reports miss estimates we could see the see the pound continue its rally; on the other hand if the reports exceed expectations we could see the pound drop, triggering tapering fears.

The Federal Reserve’s next meeting is on 18 December, when a healthy US economy could encourage policymakers to trim the stimulus package.

Spot FX GBP/USD chart

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