GBP Rises Amid Healey Speech Anticipation as Fed Hike Odds Rise
The British Pound (GBP) rose marginally against the US Dollar (USD) to around 1.3525 during Monday's European trading session, despite strong Nonfarm Payrolls (NFP) figures from the United States Bureau of Labor Statistics for August.
The NFP data showed that the economy created 162K fresh jobs, exceeding estimates of 56K, while July's NFP data was revised higher to 21K from -23K. The strong US employment report has revived expectations for a September Federal Reserve rate hike, with analysts at Commerzbank noting that the probability of a 25bp hike on 16 September rose to 62% compared to 51% before the employment report.
The focus is now shifting to the upcoming US Consumer Price Index (CPI) data for August, which will be published on Friday. Ahead of this release, Federal Reserve board members have signaled that recent data on inflation has been 'encouraging' and inflation expectations are contained.
Investors also await a speech from UK Chancellor John Healey, who is expected to discuss the state of the economy ahead of next month's Budget. Strategists at Brown Brothers Harriman (BBH) note that remarks from Healey will likely revolve around raising taxes and reducing expenditure, in an effort to build a solid fiscal 'buffer against uncertainty'.