The British pound experienced a rise above $1.35, primarily driven by a weakening US dollar following US jobs data that suggested a cooling labor market. This development has bolstered expectations of a Federal Reserve rate cut later in the month. However, the pound remains on track for a slight weekly decline amid domestic fiscal uncertainty and apprehension surrounding the upcoming Autumn Budget. The Governor of the Bank of England also expressed doubt regarding the timing of UK rate cuts.
- The British pound rose above $1.35.
- Dollar weakness, triggered by US jobs data, fueled the pound’s rise.
- The US economy added only 22K jobs in August, below the 75K forecast.
- The US unemployment rate increased to 4.3%, the highest since 2021.
- Markets are pricing in around 66bps of easing in 2025 by the US Federal Reserve.
- Sterling is on track for a 0.3% weekly decline.
- Fiscal uncertainty and concerns about the Autumn Budget are weighing on UK assets.
- BoE Governor Andrew Bailey expressed “considerably more doubt” about the timing of UK rate cuts.
The value of the British pound is currently influenced by both international and domestic factors. While a weaker dollar provides some upward momentum, internal economic concerns appear to be limiting its gains. The market is reacting to the possibility of future actions by central banks in both the US and UK, and any shift in expectations could result in volatility.