FX.co ★ Sterling Hovers at 8-Week Low

The British pound hovered around $1.339, nearing an eight-week low, predominantly influenced by the strengthening US dollar. This surge in the dollar followed President Trump's announcement that he had no intention of dismissing Fed Chair Jerome Powell, despite his criticisms of the Federal Reserve's pace in reducing interest rates. In the UK, market participants are evaluating recent labor and inflation statistics to gain insights into future monetary policy. The job market is showing signs of weakening, with a continuous decline in payroll employment, although adjusted tax data indicates that this drop is less pronounced than initially believed. The unemployment rate increased to 4.7%, while wage growth, although still robust by historical standards, displayed signs of deceleration. Additionally, inflation exceeded expectations in June, registering at 3.6% compared to the anticipated 3.4%. These mixed signals contribute to the Bank of England's policy uncertainty. The slowdown in wage growth suggests the possibility of rate cuts, yet persistent inflation might postpone such actions. Consequently, traders have slightly lowered their expectations but continue to predict two rate cuts by 2025.