By Simon Eastman
Yesterday had no data releases apart from a revision to the recent non-farm payrolls data, giving the US Dollar a boost and driving sentiment across the day.
The Pound was making small gains across the board in the morning’s trade yesterday, with a lack of any data to report on and Sterling bolstered by the UK government’s latest reshuffle, as the fresh start brought some mild positivity to markets.
Trading ranges remained thin though, as has been the way of late, with little movement in the morning. As the US market opened at lunchtime, the Pound reached its peak, then gave way to Dollar strength as the US nonfarm payrolls revision report was released.
This was the first annual revision of NFP which showed the US added 900,000 less jobs through the year March 2024 – March 2025, than initially reported. This figure is not firmed up until the final revision in February 2026, but for now it was enough for markets to decide the FED has seen enough damage to the US labour market, to look at cutting interest rates further from next week’s meeting. We saw the US Dollar gain just under a cent against the Pound, whilst gaining half a cent against the single currency. The weaker Euro also helped Sterling make some gains, giving the best GBP > EUR buying levels this month.
Usually this would be a negative for a currency but given the slowdown of their economy and impact on the labour market, this would be seen as a positive step for the US. The question now seems to be not will they cut, but by how much, with some speculating we could see a bumper 50 basis point cut on September 17th.
The only release out today is over in the US and is another key release as we get their inflation reading. This could be a stumbling point to the speculation surrounding a cut, as inflation remains above the 2% target, so a further increase in this level could give second thoughts as to whether the FED will cut interest rates again or not.
For those with Sterling in hand, this opportunity to buy Euros might well be short-lived if inflation works against the Dollar. The Euro may gain back strength, so, as always, keep in touch with the team for some friendly guidance and let us help you make your money go further.