- Optimistic expectation on U.S. job market
- Tension rising between the EU and the UK
- Potential selling opportunity for GBP/USD
U.S. Jobs Market: Optimistic expectation
The U.S. Non-Farm Payroll (NFP) for September is due for release this Friday at 2030 (SGT). It is the final release before the 2020 U.S. presidential election on 3 November. The overall forecast of the job market in September is quite positive. The unemployment rate downtrend is expected to continue through September while more jobs are expected to be added albeit at a slower pace. The forecast of a lower average hourly earnings may be the result of more lower income personnel returning to the workforce, thus pulling the average earnings lower.
Brexit: Tension is rising
Meanwhile, tensions are rising between the EU and the UK over Brexit. European Commission President Ursula von der Leyen announced earlier today in Brussels that “the commission has decided to send a letter of formal notice to the UK government” for breaching the obligations of the Brexit Withdrawal Agreement. This letter constitutes to the first step in a legal process that may lead to a lawsuit at the European Court of Justice. The Internal Market Bill that was published by UK Prime Minister Boris Johnson and his government earlier this month intends to amend part of the Withdrawal Agreement that was laid down before the UK left the EU earlier this year. However, the UK government has been warned by its top legal advisers that the bill will lead to a breach of international law. Read more about the Internal Market Bill here.
Currency Pair: GBP/USD
Why: The announcement by the European Commission President has caused GBP/USD to fall by more than 100pips. Weakness in pound is expected to continue for the time being.
When: Only after the U.S. jobs reports is released. Better than forecasted figures may lead to the strengthening of the USD, providing more downward momentum for GBP/USD.
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