U.S. Economy

The Pound to Dollar exchange rate made another attempt at recovering above 1.22 in midweek trade after official data suggested growth in U.S. employment costs moderated last quarter and that productivity picked up in labour market outcomes that would likely be welcomed by the Federal Reserve (Fed). 

The Pound to Dollar exchange rate rose to some of its highest levels for almost months when climbling back above 1.22 and approaching the 1.23 handle in a rally that built further following the release of Bureau of Economic Analysis data confirming that U.S. inflation pressures eased in October. 

U.S. retail sales were significantly higher than expected in October, but there are signs this spending is being funded by an increasing debt burden that offers flashbacks to behaviour that preceded the 2008-2009 recession.

GBP leapt 2.0% against the U.S. Dollar following the release of U.S. inflation data that was softer across the board.

USD a percent against GBP and 1.20% against EUR following the release of U.S. labour market data that, while still strong, confirmed a trend of slowing employment gains and wage growth.

Advice that the Fed should consider ending its rate hiking cycle "is badly misguided" says Larry Summers.

The 'pivot' in the Federal Reserve's hiking cycle, and the Dollar rally, remains as elusive as ever after data confirmed U.S. inflation continues to run hot.

The Dollar was sharply higher against the Euro and Pound Sterling following the release of U.S. labour market data that betrayed a healthy economy and invited the Federal Reserve to maintain a policy of aggressive interest rate hikes.

The Dollar rose sharply after data showed U.S. inflation is running hotter than markets were expecting, meaning the Federal Reserve will be emboldened in its desire to raise interest rates.

Stronger than expected labour market data released out of the U.S. on Friday will keep the Dollar.

"In one line: Startlingly terrible, but scarcely believable" - Pantheon Macroeconomics.

The U.S. economy added 528K jobs in July, a number that more than doubled the 250K jobs the market was expecting and aided a rebound in the U.S. Dollar.

A key measure of U.S. inflationary developments adds to evidence a peak in inflation is nearing, weighing on the Dollar at the start of August.

The Federal Reserve has little incentive to step back from its fast paced interest rate hiking cycle after its favoured measure of inflation comes in above expectations.

"Growth momentum is undoubtedly weakening amid headwinds such as rapid policy tightening"

On a day of PMI data releases it is the UK which has surprised positively while the Eurozone and U.S. have all delivered sizeable downside surprises.

The Eurozone economy faces significant supply challenges, but demand in the U.S. economy will be squashed by a very active Federal Reserve to the extent that a recession is now likely in 2023.

"One day, a recession will come, but the current evidence points to upside not downside," says Stephen Gallagher, Head of Research for the Americas at Société Générale in New York.

The Dollar jumped after U.S. inflation figures for April came in stronger than the market was expecting.

A powerful GBP/USD sell-off was meanwhile arrested near 1.2436, with the EUR/USD consolidating at 1.04.