The British pound experienced an increase against the US dollar, surpassing the $1.35 mark. This upward movement is primarily attributed to a weakening dollar, fueled by recent US jobs data. Despite this positive movement, the pound is still on track for a weekly decline.
- The British pound rose above $1.35.
- The rise was driven by broad dollar weakness after US jobs data.
- US jobs data indicated a cooling labor market, reinforcing expectations of a Fed rate cut.
- Markets are pricing about 66bps of easing in 2025.
- The US economy added just 22K jobs in August, below the forecast of 75K.
- 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 are weighing on UK assets.
- BoE Governor Andrew Bailey expressed “considerably more doubt” about the timing of UK rate cuts.
The pound’s mixed performance indicates a complex interplay of factors influencing its value. While external pressures, such as US economic data and Federal Reserve policy expectations, are providing some support, internal factors, including fiscal concerns and uncertainty surrounding the Bank of England’s monetary policy, are acting as headwinds. This suggests that the pound’s future trajectory will depend on how these competing forces evolve and interact in the coming weeks and months.