Pounds dumps after US jobs report

The pound slipped against the US dollar after the latest non-farm payrolls report came in above estimates.

Sterling is trading at $1.4888, down 1.2% on the day as the US created 195,000 new jobs in May. This boosted the US dollar as economists were only expecting an increase of 165,000. In the same announcement, the US stated that an additional 70,000 jobs were created in May and April, adding to the speculation that the Federal Reserve will taper its bond buying scheme.

Although US unemployment remained at 7.6%, traders are confident that it will fall next month given today’s non-farm payrolls report. Traders are therefore selling the pound and buying the US dollar as they believe the Fed are now more likely to taper their stimulus package which could take the pressure off the dollar.

Also adding to the pound losing 1% versus the US dollar yesterday was Mark Carney of the Bank of England stating that interest rates and the quantitative easing programme would remain unchanged for the foreseeable future. This encouraged some traders to sell the pound versus the US dollar as it suggests that the UK might look to increase interest rates next year due to the improving economy.

Spot FX GBP/USD chart

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