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GBP continues to grow stronger against its major counterparts; USD ADP slightly missed forecast but will not change investors’ confidence on the US economy

Daily News May 6, 2021 at 04:22 am (GMT)

• GBPUSD holds gains ahead of BoE decision and Scottish election
• GBPEUR rises as UK car sales rebound in April
• US ADP Payrolls landed impressively at 742k despite slightly missing the forecast

GBP holds gains against USD ahead of Bank of England’s rate decision and Scottish election. The pair is currently hovering around 1.3910 at press time, up about 0.07% since opening. BoE on this Thursday is expected to hold rates steady at 0.10% and maintain its monthly bond purchasing unchanged. Moreover, updated economic projections will be announced along with the rate decision, and the update is likely to show that the economy has “largely been stronger than expected when the last projections were published in February.” Regarding the election in Scotland, if the Scottish Nationalist Party (SNP) wins an overall majority, first minister Nicola Sturgeon has promised to initiate another referendum on independence. Currently, the polls suggest that the result is too close to call.

GBP also strengthened against EUR today and rose by 0.2% right after the Society of Motor Manufactures and Traders Ltd. (SMMT) revealed a rebound in car sales last month. The UK economy continues to show an uptrend, especially considering that daily cases are declining evidently. Currently the figure is at 1,946, decreased by 739 on a WoW basis; daily deaths are also in single digit. On the other hand, EUR failed to show much strength despite its PMI beating the forecast. It climbed to 53.8 in April, versus the previous level at 53.2 in March, marginally beating the forecast at 53.7.

US job market recovers as expected. ADP released its data at 742k, slightly missing the forecast of 800k. However, it has nevertheless shown some improvements compared with the previous figure at 565k. The news slightly dimmed USD but the impact was limited as it will not change investors’ outlook on the general direction of the US economy. On Friday, we will have the non-farm payrolls from the Labor Department. The consensus is 978k, up from the 916k in March. Investors are expecting that, as recovery moves forward, the hospitality sector will add a significant number of new jobs.