GBP/USD: Little Movement Ahead Of Nonfarm Payrolls

 | Oct 21, 2013 12:21PM ET

It's been a very quiet Monday in the currency markets, and GBP/USD is no exception. In the North American session, the pair is trading in the mid-1.61 range. In economic news, US Existing Home Sales disappointed, falling short of the estimate. The markets will also be keeping a close eye on Nonfarm Payrolls, which will be released on Tuesday. There are no UK releases on Monday.

With the debt crisis out of the way, at least for a while, the markets have been able to shift their attention to economic data. US Existing Housing Sales dropped to a three-month low, falling to 5.29 million. This fell short of the estimate of 5.31 million. On Tuesday, we'll get a look at key employment data, with the release of Nonfarm Payrolls and the Unemployment Rate.

After a bitter political struggle which saw the US on the brink of a sovereign default, the Republicans and Democrats finally reached an agreement last week to reopen the government and raise the debt ceiling. However, the deal provides short-term relief only -- the government will be funded until January 15, while the debt limit will be raised until February 7. So, we could be right back where we started in just a few months. The dollar initially gained ground after the agreement was announced, but was broadly lower as optimism faded. The British pound enjoyed an excellent week, posting gains of over two cents against the retreating US dollar.

The recent government shutdown in the US resulted in the postponement of some US economic releases, notably Nonfarm Payrolls, one of the most important employment releases. The September report was supposed to be released in early October, but has been rescheduled for release on Tuesday. The NFP release could have a major impact on EUR/USD. Meanwhile, last week's Unemployment Claims came in at 357 thousand, very close to the estimate of 358 thousand. This figure was an improvement from last week, but still well above previous releases. The shutdown inflated the release, as hundreds of thousands of Federal employees were laid off. This week's estimate is lower, with an estimate of 341 thousand.