The British pound experienced a temporary surge above $1.35, primarily driven by a weakening US dollar following disappointing US jobs data. However, despite this upward movement, the pound remains on track for a weekly decline due to domestic concerns surrounding fiscal policy and the upcoming Autumn Budget. Furthermore, cautious remarks from the Bank of England Governor regarding the timing of potential UK rate cuts are adding to the uncertainty surrounding the currency’s performance.
- The British pound rose above $1.35.
- The rise was fueled by broad dollar weakness after US jobs data indicated a cooling labor market.
- Markets are pricing in about 66bps of easing by the Federal Reserve in 2025.
- US jobs growth was weaker than expected in August, and the unemployment rate rose.
- 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 mixed signals surrounding the British pound highlight a complex situation. While external factors, such as US economic data, can provide temporary boosts, domestic economic and policy concerns continue to exert significant downward pressure. Investor sentiment appears to be heavily influenced by the anticipation of future fiscal measures and the cautious approach of the central bank regarding monetary policy adjustments. This dynamic suggests that the currency’s trajectory will likely be characterized by volatility and sensitivity to both global and local economic developments.