At the end of a week where geopolitics dominated, economics was back in the spotlight on Friday with US non-farm payrolls. This is the most widely trusted measure of the US labour market and while it said that hiring was quieter, the numbers were not viewed as disastrous.
This dampened expectations of another interest rate cut from the Federal Reserve at its next meeting on 5 February, and the dollar built on the strength that had already been seen across the board. On that subject, there are reports this morning that the US government – or at least that part of it that president Trump controls – is going to press charges against the Fed’s chair Jerome Powell for, as they say, misleading Congress over some building repairs. No-one really believes this is anything other than pressure to cut interest rates sooner, potentially by removing him.
So, GBP/USD starts the week 1% down and EUR/USD about two thirds of a cent down compared to last Monday.
For the coming week, UK data comes back into the frame with retail sales inflation tomorrow and GDP on Thursday. The government will be desperate to see some growth on Thursday, although the analysts are not predicting any.
As part of the search for growth the government hopes to do a “reset deal” with the European Union. The first phase would be a veterinary, or sanitary and phytosanitary (SPS), agreement to remove most Brexit red tape faced by agrifood exporters and potentially increase UK food and drink exports by more than 20%. However, Nigel Farage, leader of the Reform party currently leading the polls says he will tear up any agreement if he wins power.
