The short-term direction of GBP/USD will be decided later today when the August US Jobs Report is released with market expectations of between 725k and 750k new jobs being created. Today’s jobs report (NFP) is the last look at the US labor market ahead of the September 21-22 FOMC meeting. Last week’s speech by Fed chair Jerome Powell, and weaker than expected US data over the last few days, has seen the market pare back expectations of a taper timetable being announced at the September meeting, pushing the US dollar back down to a one-month low. With the US on holiday on Monday – Labor Day – any divergence from market expectations may have an outsized effect on the greenback across a range of USD pairs post-release.
Sterling has had little domestic news or data to help turn the dial of late, though this is likely to change next week when UK PM Boris Johnson is said to be announcing a hike in UK National Insurance to help pay for reforms of the social care program. The announcement is likely to affect 25 million UK taxpayers and would break the Conservative pledge in the 2019 General Election that there would be no increase in National Insurance. If this hike comes into play, PM Johnson will have to carefully navigate tricky waters as breaking any tax pledge would undermine public confidence in the PM.
