Sterling gains against the greenback before payrolls today

The British pound edged up against the Dollar on Friday due to risk appetite which kept the pair near a one week high but gains were limited as traders braced for key U.S. jobs data later in the day. Sterling held steady against the euro after the European Central Bank sounded a more dovish than expected note, supporting the single currency and as investors looked ahead to the Bank of England policy meeting next week also seen keeping monetary policy loose for some time to come. We saw a slightly worse than expected ADP number suggesting that perhaps we will not see this improvement in payrolls that people expect," said Johan Javeus, currency strategist at SEB Merchant Bank. "A negative surprise in the U.S. will be a risk appetite dampener and this will be negative on sterling." The GBP/USD is currently trading at $1.6350 as of 10:26am, London Time.

The euro rose against the JPY as stocks in Europe gained for a second day and before a report that may show U.S. payrolls fell at the slowest pace in a year. The U.S. may have cut 230,000 jobs last month, according to the median forecast of 79 economists in a Bloomberg survey. “It all rests on whether or not the market is right about the payroll,” said Stuart Bennett, a senior currency strategist in London at Calyon, the investment-banking arm of Credit Agricole SA. “If we do see a surprise in either direction, we could get some frantic movements in the euro.” The EUR/USD is currently trading at $1.4265 as of 10:33am, London Time.

Employers in the U.S. probably cut another 230,000 jobs in August, and the jobless rate increased, underscoring threats to consumer spending, economists said before a report today. Rising joblessness underscores Treasury Secretary Timothy Geithner’s judgment that it’s “too early” to start exiting from the unprecedented stimulus measures helping stabilize the economy. “Given that we expect only modest economic growth in the initial phase of the recovery, it might not be until the second half of next year until payroll growth really begins to ramp up,” said Joseph Brusuelas, a director at Moody’s Economy.com in West Chester, Pennsylvania. “Job cuts will need to slow further if spending is to avoid steep declines.”

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