Pound Dollar Exchange Rate Slips on Strong NFP Data, BUT, Can Rally Last?

Not since the start of 2000 has the US enjoyed such a run of job creation - and the miserable GDP performance of the start of the year is fast becoming a distant memory.

At the time of writing a look at the key dollar rates shows:

The pound to dollar exchange rate is at 1.7158.
The euro dollar exchange rate is at 1.3600.
The US to Canadian dollar exchange rate is 0.12 pct higher at 1.0646.

PS: If you are holding out for higher rates, or want to lock in current rates for protection against further falls, we suggest setting up stop order / option with an independent FX provider. Learn how here.

Dollar recovers, but is the NFP enough to ensure ongoing strength?

The US economy added 288K jobs in the previous month, well ahead of analyst expectations for 212K, however forex traders have bought the dollar on the observation that June's surging rate of job creation was trumped by April's revised figure of more than 300,000.

Marcus Bullus, trading director of MB Capital, comments:

"Someone attached the jump leads to the US jobs market in June.

"After Wednesday's solid ADP number, we were quietly optimistic that today might be the big one. It was.

"The markets will go into the long weekend on a buzz, while strong upward revisions in April and May will add to the feel-good factor."

Bill Kemp, head of dealing at the forex specialists FEXCO, does however question the extent to which the USD will be able to rally:

"The US economy has broken out the Fourth of July bunting a day early.

"Such blockbuster jobs numbers will send the Dollar into the Independence Day holiday with a spring in its step.

"Not since the start of 2000 has the US enjoyed such a run of job creation - and the miserable GDP performance of the start of the year is fast becoming a distant memory.

"But despite the Greenback's immediate rally, not even Tim Howard can save it from the currency markets' niggling concerns over the Fed's interest rate policy.

"With Janet Yellen warning this week that she will not raise interest rates to fight financial bubbles, noone is expecting the Fed's interest rate policy to shift until well into next year.

"By contrast a rate rise is very much on the table at the Bank of England - which drove Sterling to a six-year high against the Dollar this week.

"With that continuing divergence in monetary policy, don't expect the Pound's bull run against the Dollar to ease substantially any time soon."