Pound rallies against dollar after weak US jobs data

The official data could be taken as evidence that the Federal Reserve’s interest rates hikes are working their way through the economy.

The pound has rallied against the US dollar after weak US payroll data (Dominic Lipinski/PA) (PA Wire)

The pound has rallied against the US dollar after weaker-than-expected jobs data across the pond, while the UK’s top share index has ended the week in the red.

London’s FTSE 100 wiped off some of Thursday’s rally with gains for some retailers failing to offset losses for energy giants.

The index was down 28.8 points, or 0.39%, to close at 7,417.73 on Friday.

Retailers like Ocado, JD Sports, and Kingfisher were among the FTSE’s biggest risers despite new data revealing that retail volumes fell by nearly 6% last month compared with the year before.

But the drop is likely to be down to volatile weather with heavy rainfall deterring shoppers during October, the British Retail Consortium said.

Energy firms Shell, BP, and Centrica were trading lower as oil prices slipped.

Markets are eager for signs that their belief that rates have passed their peak are correct

Chris Beauchamp, chief market analyst at IG

Meanwhile, US markets enjoyed a boost after new data showed the pace of jobs growth slowed sharply last month from September, and the unemployment rate edged up, indicating that the jobs market is showing signs of cooling.

The official data could be taken as evidence that the Federal Reserve’s interest rates hikes are working their way through the economy.

But the weak payrolls data led the pound to rally against the US dollar on Friday afternoon. Sterling jumped 1.5% to 1.2382 dollars, the highest level in around six weeks.

Chris Beauchamp, chief market analyst at IG, said: “It has been a storming week for equities, bolstered by cautious Fed comments and now by the signs of slowing US jobs growth.

“Once more, this puts investors in the odd position of being cheered by poorer economic figures, but markets are eager for signs that their belief that rates have passed their peak are correct.”

By the time European markets closed, the S&P 500 was up 1.1%and Dow Jones was 0.85% higher.

It was a mixed session in Europe with Germany’s Dax closing 0.3% higher and France’s Cac closing 0.19% lower.

The price of Brent crude oil fell 1.45% to 85.6 US dollars per barrel.

In company news, shares in Currys were up after the electronics retailer said it had agreed to sell its Greek and Cypriot arm for 200 million euros (£175 million).

Currys chief executive Alex Baldock said the proposed sale was an “excellent outcome” for the group and for shareholders, allowing it to focus on the UK and Ireland and getting its loss-making Nordics business back on track. Shares in Currys closed 4% higher.

Meanwhile, fellow retailer Wickes revealed a dip in third-quarter sales, attributing the slowdown to IT disruption and some customers delaying big-ticket purchases as budgets remain squeezed.

But the business said its core DIY materials and builders’ merchant arm was more resilient, with sales rising over the latest period. Shares in Wickes closed 0.8% lower.

The biggest risers on the FTSE 100 were Ocado, up 33p to 542.2p, BT, up 6.7p to 124.15p, Endeavour Mining, up 83p to 1,741p, Segro, up 35p to 783.6p, and Entain, up 35.2p to 919.6p.

The biggest fallers on the FTSE 100 were Shell, down 115.5p to 2,652.5p, Centrica, down 4.3p to 153.3p, Compass Group, down 50p to 2,052p, Reckitt, down 130p to 5,412p, and Sage Group, down 21.4p to 970p.