Pound’s Rally Slows as US Jobs Data Looms
Sterling is down 0.2% against the dollar, trading around $1.311
Pound has lost over 1% in the past five days
The dollar is near a two-week high ahead of key US data

Pound’s Rally Slows as US Jobs Data Looms

The pound’s recent strong rally has slowed, with traders looking for direction in a quiet week for UK economic data. Sterling is down 0.2% against the dollar, trading around $1.311, after losing over 1% in the past five days.

The dollar is near a two-week high ahead of key US data, including manufacturing PMI and Friday’s jobs report. These figures will influence whether the US Federal Reserve cuts rates by 25 or 50 basis points in September. Strong data could lead to a smaller cut, while weak jobs numbers might push for a larger reduction.

Despite its recent dip, the pound has outperformed expectations this year. Last week, it reached its highest level against the dollar in 29 months and hit a strong position against the euro earlier this year. Chris Turner of ING attributes this to the Bank of England’s cautious approach to easing and economic struggles in the eurozone and the US.

Markets expect multiple rate cuts from the Fed and ECB this year, but only one from the Bank of England. UK inflation and wage growth remain high, and the economy has grown faster than expected, making it the G7’s top performer in the first half of the year.

Looking ahead, Turner doesn’t see the Autumn Budget significantly affecting the pound. However, Bank of America predicts the pound could reach $1.35 by the end of the year if the UK labour market tightens, leading to slower policy easing.