GBP

Settling gas markets and improving equities enabled a backdrop that has a tendency to benefit the pound, but market sentiment will be challenged by a huge jobs report from the US later.

Providing risk-on market conditions continue into Friday’s close, the pound will complete a rare weekly advance against the dollar and a second successive weekly gain on the euro.

Most investors seem to believe it is unlikely the Federal Reserve (Fed) will hike rates before the end of 2021, potentially allowing risk-on currencies the chance to strengthen should we see better-than-forecasted figures. However there is a possibility currency markets could also interpret a stronger-than-expected jobs report as a major headwind to US and global growth, as we could see more speculation around a 2021 rate hike.

Gas prices across the world have taken a sharp dip and stabilised since Russian President Vladimir Putin said Russia would add a significant boost to the supply of gas to the European market, a move that has settled currency markets. Both GBP and EUR managed to post minor recoveries against USD as a result of the news.

USD

The dollar continued to hold at strong levels into Friday despite risk sentiment improving.

The US Senate voted on Thursday to temporarily lift the debt ceiling, therefore avoiding a huge debt default. Investors now look towards the latest jobs report, which includes Non-Farm payrolls and is due later today. The data could impact the Fed’s timetable for asset tapering, which it has said is likely to begin as soon as November 2021. There is also a chance the Fed could also hike interest rates in early 2022. This report becomes all the more important as it is the final jobs report ahead of the all-important November meeting of the Federal Reserve.

Key announcements

13.00 – ECB President Lagarde’s speech
13.30 – US – Non-Farm payrolls