Pound Profits from Terrible US Payrolls

The Great Britain pound gained against the US dollar as bad US non-farm payrolls reduced attractiveness of the greenback. The sterling also moved higher versus the euro as traders are concerned about the European economy.

Forex traders that own euro want to find a safe haven as the economy of Europe shows signs of slowdown. The yen and the franc, being the conventional safe currencies, are logical choice, but they are under the threat of intervention. The dollar was feeling pressure of potential third round of quantitative easing for some time and now, after the very unfavorable payrolls were released, the pressure intensified. It’s not surprising, considering all the factors, that some traders again look at the pound for protection.

The problem with thinking about the sterling as protection from Europe’s problems is that Britain has its share of problems. The Nationwide House Price Index slumped 0.6 percent in August. The Manufacturing Purchasing Managers’ Index retreated from 49.4 to 49.0 in August, the lowest reading in 26 months, while the Construction PMI went down to 52.6 in August from 53.5 in July.

GBP/USD closed at 1.6215 after jumping during the trading session from 1.6177 to 1.6253. EUR/GBP sank from 0.8812 to 0.8746 before closing at 0.8761.