The British pound experienced an increase against the dollar, surpassing $1.35. This rise is primarily attributed to a general weakening of the dollar following the release of US jobs data, which indicated a cooling labor market. Expectations of a Federal Reserve rate cut later in the month were reinforced by the report, with markets pricing in substantial easing in 2025. However, despite this positive movement, the pound is still projected to conclude the week with a slight decline, influenced by domestic fiscal uncertainties and anticipation surrounding the Autumn Budget.
- The British pound rose above $1.35 against the US dollar.
- US jobs data pointed to further cooling in the labor market.
- Markets are pricing about 66bps of easing in 2025.
- The US economy added just 22K jobs in August.
- The US unemployment rate rose to 4.3%.
- Sterling is on track for a 0.3% weekly decline.
- Fiscal uncertainty and concerns ahead of the Autumn Budget in November weighed on UK assets.
- BoE Governor Andrew Bailey told MPs there is “considerably more doubt” about the timing of UK rate cuts.
The mixed signals create a complex outlook for the British pound. While external factors, such as a weaker dollar and expectations of US interest rate cuts, are providing upward momentum, domestic concerns are acting as a counterbalance, limiting the potential for significant gains. The market is currently navigating a landscape where global pressures compete with internal fiscal anxieties and uncertainty surrounding future monetary policy decisions by the Bank of England.