Finance
Sterling skids to two-month lows as dollar shines
Published by Global Banking and Finance Review
Posted on October 10, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on October 10, 2025
2 min readLast updated: January 21, 2026
Sterling falls to a two-month low due to a strong dollar, driven by political crises in France and Japan. UK hiring market remains sluggish.
By Amanda Cooper
LONDON (Reuters) -The pound fell to two-month lows on Friday, set for its biggest weekly fall since a rout in UK bonds in January, largely driven by a resurgent dollar, which has vaulted higher as political crisis unfolded in France and Japan, in particular.
Sterling has lost 1.4% against the dollar this week, the most on a weekly basis since a 1.8% drop in early January, when a swell of concern about Britain's long-term finances unleashed a sell-off in gilts and the pound itself.
The pound was last down 0.2% on the day at $1.32875. It was also a touch weaker against the euro, which rose 0.2% to 87.11 pence. The single currency, which has been weighed down by political paralysis in France, has barely made any headway against the pound this week, while sinking 1.4% against the dollar.
A survey of recruitment companies on Friday showed that Britain's hiring market remains sluggish and pay is stagnating, as employers fret about possible further tax increases in finance minister Rachel Reeves' November budget.
"A stabilising UK jobs market could offer that near-term counterweight to sterling's bearish momentum," George Vessey, Lead FX & Macro Strategist at Convera, said.
Reeves is widely expected to increase taxes to keep public finances on track to meet her fiscal targets. Investors are becoming increasingly concerned about the stability of the government's finances and this is materialising as weakness in both sterling and gilts.
The yield on the benchmark 10-year gilt has risen 2 basis points so far this month, compared with a 4 bp decline in both U.S. and German yields, which in theory, should support the pound.
"We continue to expect sterling to struggle while investors await clearer signals on UK fiscal policy and the timing of rate cuts," Monex strategists said in a note.
(Reporting by Amanda Cooper; Editing by Kirsten Donovan)
Foreign currency refers to any currency that is not the domestic currency of a particular country. It is used in international transactions and can fluctuate in value based on exchange rates.
Currency hedging is a financial strategy used to protect against potential losses due to fluctuations in currency exchange rates. It involves using financial instruments to offset risks.
Economic growth is the increase in the production of goods and services in an economy over a specific period. It is often measured by the rise in Gross Domestic Product (GDP).
Financial markets are platforms where buyers and sellers engage in trading financial assets such as stocks, bonds, currencies, and derivatives. They play a crucial role in the economy by facilitating capital flow.
The UK economy refers to the economic system of the United Kingdom, characterized by a mixed economy with a combination of private and public enterprise. It includes various sectors such as services, manufacturing, and agriculture.
Explore more articles in the Finance category
