Finance
Sterling holds firm against dollar after weak US jobs report
Published by Global Banking and Finance Review
Posted on September 8, 2025
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Published by Global Banking and Finance Review
Posted on September 8, 2025
LONDON (Reuters) -The pound hovered largely unchanged on Monday, having posted its biggest one-day rally against the dollar in two weeks on Friday, following surprisingly weak U.S. employment data that has cemented expectations for a U.S. rate cut this month.
Sterling was last unchanged on the day at $1.3513, having risen by 0.5% on Friday, when the dollar came under heavy pressure following the August nonfarm payrolls report that showed just 22,000 jobs were created last month and far fewer were created in the prior months, too.
Traders are fully expecting a quarter-point cut from the Federal Reserve when it meets next week and a high chance of identical cuts in October and December.
The Bank of England, which also meets next week, is barely expected to deliver even one rate cut in the remainder of this year, given UK inflation remains well above the central bank's 2% target and the economy is slowing, but without obvious signs of a more serious weakening.
This divergence creates a theoretical advantage for sterling and UK assets in general, as investors stand to benefit from higher British interest rates versus those elsewhere.
Sterling shrugged off UK Prime Minister Keir Starmer's cabinet reshuffle on Friday after the resignation of his deputy, which did not affect finance minister Rachel Reeves.
The pound was also steady against the euro, which traded at 86.8 pence.
"There's no UK data of note this week and few Bank of England speakers. We suspect euro/sterling can trade in a 86.50-87.00 range this week, given that next week's BoE meeting and news on quantitative tightening plans will be far more interesting," strategists at ING said in a note.
Against the Japanese yen, sterling rallied to one-month highs above 200, after Japanese Prime Minister Shigeru Ishiba said he would resign on Sunday.
Ishiba said he was taking responsibility for his Liberal Democratic Party's election losses earlier this year.
(Reporting by Amanda Cooper; Editing by Hugh Lawson)