Cable is at the crossroads, finding its feet and looking for a direction – and that next move could be a zig-zag, first up and then down. That may present a selling opportunity after the Non-Farm Payrolls report, Yohay Elam, an analyst at FXStreet, informs.
Key quotes
“The economic calendar is pointing to an increase of 1.4 million jobs, but there are reasons to expect a lower figure. First, the employment components of ISM’s purchasing managers’ indexes both pointed to contraction – both in services and in manufacturing. Second, ADP’s private-sector labor figures missed estimates with an increase of only 428,000 positions last month. Third, a seasonal quirk that pushed July’s statistics higher is not in play in August. Overall, an increase of fewer than one million jobs cannot be ruled out and that could weigh on the dollar.”
“After the NFP dust settles, there is room to refocus on Britain’s issues. Leeds, a large northeastern city, is facing lockdown amid an increase in coronavirus cases. The UK’s virus situation is much improved in comparison to the worst of the crisis, but it is not out of the woods.”
“Brexit talks remain deadlocked and there is also little progress in preparations for the day after the transition period ends. Concerns about the state of customs may also weigh on sterling. “
“Apart from Brexit, another time bomb looms – the expiry of the furlough scheme in October. It seems that the government would like to extend it, yet may have to raise taxes. Investors and the public are unhappy with the miserable choices. Rishi Sunak, Chancellor of the Exchequer, briefed fellow Conservative Party members of ‘difficult times.’ Officials at the Bank of England echoed that message by warning of a long recovery path.”
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