FX.co ★ Pound Extends Gains as Markets Await US Jobs Data

The British pound climbed above $1.35 on Friday, rebounding from two-week lows as investors awaited fresh direction from US employment data due later in the day, while continuing to assess signals from major central banks. Bank of England Chief Economist Huw Pill said on Thursday that raising interest rates now could reduce the risk of the central bank needing to tighten policy more aggressively later to contain inflation, which has risen amid the fallout from the conflict with Iran. Markets are now fully pricing in a BoE rate hike by year-end, with an additional increase expected by March 2027.

Meanwhile, Federal Reserve Governor Christopher Waller noted that recent data showed signs of disinflation and indicated that, if upcoming figures confirm this trend, he would favor keeping interest rates unchanged at this month’s policy meeting. Markets reacted quickly, with futures implying roughly a 50% probability of a Fed rate hike this month, down from about 63% a day earlier.