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

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.