The pound started the week evenly on Monday, remaining stable at $1.3513. It had risen 0.5% on Friday following the surprisingly weak US employment data, recording its biggest daily rally in two weeks.
The data showed that only 22,000 jobs were created in August, falling short of expectations in previous months as well. This solidified market expectations that the Fed will cut interest rates by a quarter point next week; It is also predicted that similar steps may come in October and December.
In contrast, the Bank of England is unlikely to cut interest rates this year, as inflation is still above its 2% target. This difference theoretically creates an advantage for the pound and British assets.
The pound largely ignored Prime Minister Keir Starmer’s cabinet reshuffle. While it remained stable at 86.8 pence against the euro, it rose above 200 against the yen following Japanese Prime Minister Shigeru Ishiba’s resignation announcement, reaching its highest level in the last month.
