Pound Falls as US Jobs Report Boosts Hike Prospects, Unemployment Steady
The August employment report in the US saw a significant jobs gain of 162K, exceeding economists' estimates and putting a September Federal Reserve rate hike back on the table. This development sent the pound-to-dollar conversion into a sharp reversal, falling from 1.3535 to a low at 1.3487 within twenty minutes of the release before recovering to 1.3510.
The unemployment rate remained steady at 4.1%, and July's reported decline of 23K was revised to a gain of 21K, removing contraction that had become a strong argument against further tightening. August's job gain also ran more than five times the average monthly increase of 31K recorded over the prior twelve months.
Federal Reserve Governor Christopher Waller's statement that he did not expect the employment report to look materially different from recent labour data was met with an emphatic response, removing his argument to hold rates later this month. Rate futures had put the probability of a September hike at around 52% ahead of the release, down from 63.2% on Wednesday following Waller's intervention.