- Pound to Euro exchange rate today (3-12-16): 1.1946
- Pound to Dollar exchange rate today: 1.2736
- Euro to Dollar exchange rate: 1.0668
The lock-step moves between the Dollar and Pound Sterling allowed both currencies to benefit against the Euro on stronger-than-forecast US employment data.
It was a muddled reaction by the US Dollar to the release of better-than-forecast US employment data.
The Dollar took a sudden fall on the release as the EUR/USD jumped higher which in turn took EUR/GBP higher.
However, these big releases can often give us some unexpected turbulence largely because the initial trades are algorithmic in nature and it requires some good old common sense to steady the ship by traders that actually have brains.
Hence, the Dollar recovered its knee-jerk losses to end the day highe as these were some pretty decent figures that are clearly Dollar-positive:
- The headline non-farm payroll number in the Employment Situation report showed the workforce grew by 178K in November, ahead of expectations for 175K.
- There was even a sudden slip in the unemployment rate to 4.6% from 4.9%.
"The jobs market looks to be at its healthiest for some time, with today’s better than expected nonfarm payrolls number at its highest since May. These figures continue to add weight to the argument to raise interest rates at the nearest possible opportunity," says Paul Sirani, Chief Market Analyst at Xtrade.
Strong Week for Sterling, More Gains Possible
Pound Sterling was the third-best performing G10 currency for the week ending December 2 having been outperformed by the oil-linked Norwegian Krone and Canadian Dollar.
The surge in oil prices following the OPEC deal to cut production in order to push prices higher benefited the two currencies.
"Sterling saw a bounce too during the week as the broader short covering trend continued, boosted by comments from the Brexit minister, David Davis, that the government saw the possibility of making payments to the EU for continued access to the Single Market post-Brexit as an option," notes Kit Juckes, a foreign exchange analyst with Societe Generale in London.
Looking ahead, we are told Sterling could push its recovery further.
“The GBP remains vulnerable to political events,” says Daniel Been at ANZ Research. “However, with solid growth; the BoE firmly on hold; and with no major policy events in the near-future - the Pound looks cheap at current levels.”
The UK economy has performed surprisingly well despite the Brexit vote - with growth at a solid above-trend 0.5% quarterly pace in Q3.
Meanwhile, in the Eurozone policy uncertainty looks set to rise – especially if the ‘no’ camp should prevail at the Italian referendum on Sunday.
“In addition to that, ECB President Draghi is largely expected to announce an extension of QE at the next ECB meeting (on 8 December) which could add to downward momentum for the euro,” says Been.
“GBP at the moment looks like good value and, if investors’ sentiment towards the euro area deteriorates, we think EURGBP could weaken from current levels,” says Been.