FX round-up: Cable up an ace despite sterling's wider list lower

Sterling gained a ace on an out-of-form greenback but otherwise was listing lower on political jitters surrounding the upcoming UK general election.

This took the shine off a better-than-expected UK construction purchasing-managers' index for May, which was issued mid-morning.

The dollar suffered after key jobs data disappointed the market this afternoon, and also in the wake of the US quitting the 2015 Paris climate accord.

At 17:10 BST, sterling was up 0.02% to $1.2884. It fell 0.5% to €1.1433. The British currency was otherwise down on the aussie, loonie, kiwi, rand and yen.

"The fact that sterling was on the back foot on Friday despite May's solid construction PMI ... continues to highlight how political jitters in the UK and Brexit fears have become bone deep," said Lukman Otunuga, research analyst at FXTM.

"It is becoming clear that Brexit developments may dictate where sterling trades and uncertainty is likely to limit any concrete upside gains," he added.

Market concerns at the moment are centering on whether PM Theresa May will win enough seats to form a government, with investors fearing a so-called 'hung parliament' scenario.

The latest poll from Ipsos Mori showed the Tories' lead over Labour had shrunk to five points from 15 points just over two weeks ago.

Michael Hewson, chief market analyst at CMC Markets UK, said this poll "completely" offset the very positive construction PMI.

Turning to the US currency, the dollar-spot index was down about 0.44% to $96.77. The dollar fell 0.52% to €0.8873. It was down on the aussie, loonie, kiwi, rand and yen.

"The US dollar has also slid back after the latest (non-farm) payrolls number for May came in below expectations," said Hewson.

"While the 138k number isn't expected to be enough to stop the US Federal Reserve from raising rates in June, it does diminish the prospect of any type of move before December," he said.

Neil Wilson, senior market analyst at ETX Capital, agreed a June rate hike was likely.

"It does look like the kneejerk is a bit overdone considering where we were with the dollar and yields already," said Wilson.

"It certainly bodes well for equities as we enter this 'Goldilocks' phase of solid growth, steady and unspectacular inflation and accommodative monetary policy."

He continued, suggesting the big question was not really whether there was a June rise, but the extent to which the market thought the Fed was ready to do one or even two more hikes this year.

"Today's jobs numbers arguably make the Fed a touch less likely to tighten as quickly as the most hawkish estimates suggest."