Investing.com - The pound fell against the dollar on Friday after an above forecast U.S. employment report boosted expectations for a rate hike by the Federal Reserve later this year.
The Labor Department reported that the U.S. economy added 280,000 jobs in May, ahead of economists forecast for 220,000. The unemployment rate ticked up to 5.5% from 5.4 in the previous month.
April’s payrolls report was revised to show that 221,000 jobs were created.
Hourly earnings increased 0.3% in May, after a 0.2% increase in April.
The upbeat data, particularly the pick-up in wage growth underlined the view that the economy is on track to rebound after a weak first quarter and bolstered expectations that the Federal Reserve could start to hike interest rates at its September policy meeting.
The dollar rallied against the other major currencies following the release of the data.
GBP/USD fell to lows of 1.5191 before pulling back to 1.5271 in late trade, down 0.61% for the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.93% to 96.38 late Friday.
Sentiment on sterling remained fragile after private sector survey data earlier in the week indicated that growth could struggle to pick up in the current quarter after a weak first quarter.
The U.K. service sector expanded at the slowest rate in five months in May, while the expansion in the manufacturing sector slowed.
Concerns over the prospect of a possible British exit from the European Union also weighed ahead of a referendum on EU membership due to be held before the end of 2017.
In the week ahead, Thursdays U.S. retail sales report and Fridays report on consumer sentiment will be scrutinized for signs that the world’s largest economy is gaining momentum in the current quarter.
A report on U.K. manufacturing and industrial production will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no major economic data releases scheduled.
Tuesday, June 9
The U.K. is to report on the trade balance.
Wednesday, June 10
The U.K. is to release data on manufacturing production.
Later in the day, Bank of England Governor Mark Carney is to speak at an event in London.
Thursday, June 11
The U.S. is to release reports on initial jobless claims and retail sales.
Friday, June 12
The U.S. is to round up the week with data on producer price inflation and consumer sentiment.