The British pound experienced a rise against the dollar, exceeding $1.35, largely due to a weakened dollar following underwhelming US jobs data. This data fueled speculation of a forthcoming Federal Reserve rate cut. However, the pound remains on track for a weekly decline amidst fiscal uncertainty and concerns surrounding the upcoming Autumn Budget, coupled with cautious remarks from the Bank of England Governor regarding potential UK rate cuts.
- The British pound rose above $1.35.
- The rise was driven by broad dollar weakness after weak US jobs data.
- US jobs data reinforced expectations of a Fed rate cut later this month.
- Markets are pricing about 66bps of easing in 2025.
- The US economy added just 22K jobs in August, below the 75K forecast.
- The US unemployment rate rose to 4.3%, the highest since 2021.
- Sterling is on track for a 0.3% weekly decline.
- Fiscal uncertainty and concerns ahead of the Autumn Budget weighed on UK assets.
- BoE Governor Andrew Bailey expressed “considerably more doubt” about the timing of UK rate cuts.
The asset’s performance is being influenced by conflicting factors. While a weaker dollar provides upward momentum, domestic fiscal anxieties and the central bank’s hesitancy regarding rate cuts exert downward pressure. This suggests a period of volatility for the asset, with its future direction dependent on how these competing forces ultimately balance out.