Image: Official White House Photo by Adam Schultz.
The wild ride in FX continues with the Dollar falling sharply following a U.S. labour market report that pointed to weakness in the U.S. job market.
The Pound to Dollar exchange rate rallied to 1.3150 and recovered much of the previous day's losses after JOLTS job openings fell to 7.67M in July, which undershot expectations for 8.1M and was down sharply on June's 7.91M.
A decline in the number of available jobs is usually consistent with a slowing economy, and can point to rising unemployment ahead.
"Not only did the 7.673mln figure miss consensus expectations, the print also came in below the bottom of the forecast range, pointing to job openings being at their lowest level since January 2021, a further sign of the labour market cooling, quicker than participants had been expecting," says Michael Brown, Senior Research Strategist at Pepperstone.
The data provides further evidence of a slowdown in the U.S. jobs market and will raise the likelihood of at least one 50 basis point interest rate cut at the Federal Reserve before the year ends.
The reactionary rise in GBP/USD reflects that such a shift in expectations can weigh on the Dollar. "We believe rates will dominate which suggests weak data means a weak USD, rather than a safe-haven bid," says Daragh Maher, Head of Research for the Americas at HSBC.
The JOLTS data comes ahead of Friday's all-important U.S. payrolls report, which is expected to recover from July's weather-impacted disappointment.
A below-target print could ratchet up bets that the Fed will kick off the rate cutting cycle on September 18 with a 50 basis point cut. However, the September decline in GBP/USD could gather some momentum again if the data overshoots expectations and points to a need for a gradual approach to rate cuts.