Pound Slides as US Jobs Data Fuels Dollar Rally
Sterling fell below $1.335, pulling back from near two-month highs, after a strong US jobs report lifted the dollar. The greenback was already benefiting from safe-haven demand amid a global technology selloff, as sentiment toward AI stocks weakened on concerns that a Democratic sweep in the congressional elections could lead to tighter regulation and slow the industry's expansion. At the same time, markets continued to digest the implications of the Bank of England's policy decision on Thursday, where the central bank raised interest rates for the first time in more than three years. Governor Andrew Bailey indicated that further increases may be required unless the war in Iran comes to an end. In response, investors have ramped up expectations for additional monetary tightening, with three more rate hikes now fully priced in by November 2027. The central bank also warned that inflation could peak at 4.9% in Q2 2027, while its adverse scenario envisages a sharper rise to 6.2% in Q3.
Sterling fell below $1.335, pulling back from near two-month highs, after a strong US jobs report lifted the dollar. The greenback was already benefiting from safe-haven demand amid a global technology selloff, as sentiment toward AI stocks weakened on concerns that a Democratic sweep in the congressional elections could lead to tighter regulation and slow the industry's expansion. At the same time, markets continued to digest the implications of the Bank of England's policy decision on Thursday, where the central bank raised interest rates for the first time in more than three years.
Governor Andrew Bailey indicated that further increases may be required unless the war in Iran comes to an end. In response, investors have ramped up expectations for additional monetary tightening, with three more rate hikes now fully priced in by November 2027. The central bank also warned that inflation could peak at 4.9% in Q2 2027, while its adverse scenario envisages a sharper rise to 6.2% in Q3.