FX.co ★ Pound Weakens on Strong US Jobs Data, Political Uncertainty

The pound reversed earlier gains to slip below $1.34, its weakest level since May 15, as investors shifted into the US dollar following stronger-than-expected US labor data. US nonfarm payrolls rose by 172,000 in May, nearly double the consensus forecast of 85,000, prompting markets to fully price in a Federal Reserve interest rate increase by year-end. Political uncertainty also pressured sentiment after Greater Manchester Mayor Andy Burnham confirmed he intends to challenge Keir Starmer for the UK prime ministership, marking the first time he has publicly acknowledged such ambitions. Starmer has said he will not resign. Burnham’s leadership bid hinges on winning the June 18 Makerfield by-election, which would give him a seat in Parliament and make him eligible to contest the party leadership. In terms of monetary policy, markets are currently pricing in nearly two Bank of England rate hikes this year, with the first expected in September.