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HIGHLIGHTS
- GBP advanced slightly against the USD after the US reported a modest jobs growth
- Benefiting from greenback’s weakness, pound sterling added over 0.20%
- BoE had fixed a reference exchange rate of 1.3622 USD on Thursday, 7 October
The Great Britain pound (GBP) advanced slightly against the United States dollar (USD) on Friday, 7 October, after the US Bureau of Labor Statistics reported a modest growth of 194,000 jobs in September, the lowest monthly addition in 2021.
The US economy has remained under continuous pressure of economic, as well as geopolitical challenges since the onset of pandemic due to the elongated repercussions Covid-19 and malfunctioned business environment. A sub-200,000 addition of news jobs, stays well below the projected target of 500,000.
Barring December of 2020, this is the worst jobs report since April of 2020, when most of the American businesses encountered an unforeseen disruption on the back of the first national lockdown.
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Public education and health care sectors have been the major contributors in declining the jobs growth in the US, while new additions in retail, professional services, leisure and hospitality and transportation and warehousing industries failed to counterbalance according to the desired numbers.
Following the macroeconomic action, the US dollar index slipped 0.17% to 94.058 from the previous closing of 94.221. During the day, the dollar index has already shuttled between a low and high of 93.933 and 94.345, respectively. The rate of unemployment in September of 2021 dropped to 4.8% in the US from 5.2% in August, effectively approaching the level seen before lockdowns.
In March of 2020, the US recorded an unemployment rate of 4.4%, while it remained below 4% for most of the time during the pre-pandemic months. However, the rate of unemployment remains adequately above the pre-Covid levels of 3.5% as corporations continue to face shortage of workforce in various parts of the country.
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The industry-wide workforce crisis has severely disrupted the economic growth, as well as various business functions as enterprises remain under the conundrums of limited staff, as a result of which, most of the enterprises are operating with curtailed operations, potentially slowing the growth prospects.
Actively benefiting from the greenback’s weakness, pound sterling added a little more than 0.20%. According to the latest foreign exchange data, the GBP vs USD pair traded at 1.3644, up 0.20% from the previous closing mark of 1.3617. In the session so far, the currency pair has oscillated between a low and high of 1.3584 and 1.3655, respectively.
GBP vs USD (8 October)
Source: EODHD/Others
Even after successive positive sessions, the domestic currency still lags behind its multi-year highs as the United Kingdom-based businesses also face largely similar hardships of staff crisis, raw material shortage and inadequacy of businesses to operate at full scales.
Meanwhile, the Bank of England had fixed a currency conversion rate of 1.3622 USD and 1.1783 EUR against a unit of pound sterling on Thursday, 7 October
