Pound Climbs as Weak US Jobs Data Pressures Dollar

The pound climbed toward $1.34, its highest level in two weeks, as the US dollar fell following a much weaker-than-expected US jobs report and improving risk sentiment amid signs of progress in indirect US-Iran talks. The US economy added just 57,000 jobs last month, well below forecasts, while the unemployment rate dropped to 4.2% as many people exited the labor force. Elsewhere, Qatar announced that the next round of US-Iran talks would be scheduled as soon as possible, while oil prices extended their decline as shipping through the Strait of Hormuz continued without major disruptions. On the monetary policy front, Bank of England Governor Bailey maintained a dovish tone at the ECB's Sintra Forum, citing signs of a slowing UK economy but emphasizing that persistent inflation risks rule out imminent rate cuts. At the same time, Fed Chair Warsh noted that inflation expectations had eased in recent weeks while reiterating the Fed's commitment to restoring inflation to target.

The pound climbed to $1.33, a two-week high against the dollar, as investors embraced riskier assets amid signs of progress in indirect US-Iran talks. Sterling also hit a one-year high against the euro, supported by broad euro weakness following softer-than-expected European inflation data. Qatar announced the next US-Iran meeting would be scheduled as soon as possible, while oil prices continued to fall as more shipments passed through the Strait of Hormuz. Investors also digested remarks from central bankers at the ECB’s Sintra Forum. Bank of England Governor Bailey kept a dovish stance, noting a softening UK economy but ruling out imminent rate cuts due to persistent inflation risks. Meanwhile, Fed Chair Warsh acknowledged easing inflation expectations in recent weeks, though he reaffirmed the Fed’s commitment to returning inflation to its target. UK political developments are not expected to impact sterling until late July, when Andy Burnham is set to become Prime Minister.

The pound traded just above $1.32, near a seven-month low after a 1.4% June drop against the dollar, pressured by political uncertainty, a stronger greenback, and the Bank of England’s dovish tone. Against the euro, sterling hit a one-year high as the single currency weakened on softer-than-expected European inflation data. Investors are focusing on the ECB’s Sintra Forum for economic and policy signals. Bank of England Governor Andrew Bailey maintained his dovish stance, telling CNBC that UK policymakers see a softening economy and that May’s decision to hold rates at 3.75% reflected this assessment. He also ruled out imminent cuts, citing persistent inflation risks, though he acknowledged progress from falling energy prices. Meanwhile, Fed Chair Kevin Warsh offered no new guidance, with markets still expecting US rate hikes this year. In UK politics, markets assessed the likelihood of Ed Miliband becoming Chancellor, with fiscal concerns easing after Andy Burnham’s discipline pledge.