The dollar rose on Friday ahead of the publication of employment data in the United States, while the pound slightly reduced its losses the day after its plunge on Thursday, after a mini-panic caused on the markets by the new British budget. Around 10:40 a.m. GMT (11:40 a.m. in Paris), the American currency rose 0.28% against the euro, to $1.0853. A key US jobs report in October will be closely watched later in the session as an indication of the strength of the US economy.
At this stage, analysts expect a stable unemployment rate in October compared to last month, at 4.1%, but expect a decline in job creation, to 110,000 against 254,000 in September, according to consensus. from MarketWatch. But “there are growing doubts that the Federal Reserve (Fed) will cut interest rates at its next meeting” of monetary policy on November 6 and 7, notes Kathleen Brooks, analyst at XTB, “because American economic data continues to surprise” in a positive way.
For its part, the pound is slowly rising, without fully recovering from its brutal fall the day before. It barely rose by 0.08% against the greenback, to 1.2910 dollars, still at its August levels, and gained 0.36% against the euro, to 84.06 pence. The British currency suffered “because investors are turning away from British assets”explains to AFP Ricardo Evangelista, of ActivTrades, scalded by the heavy spending – including 100 billion pounds of loans – and by the tax increases announced on Wednesday. In particular, a report from the public budget forecasting body, the OBR, “indicates new fiscal measures could lead to prolonged stagnation in UK growth”notes the analyst.
Nervous financial markets are also pushing up the cost of British borrowing, due to massive bond sales. On Friday, the yield on 10-year British government bonds remained at its highest levels in a year, after reaching a peak since November 2023 the day before, at 4.53%. The budget, likely to strengthen inflation, also pushes currency traders to count on a slowdown in the pace of rate cuts by the Bank of England (BoE), which makes its monetary policy decision next Thursday, just like the Fed.
