11.02.202615:01:10UTC+00Pound Eases to $1.365 as Strong US Jobs Data Lifts Dollar

The British pound pared earlier gains to trade around $1.365 as the US dollar strengthened on the back of stronger-than-expected US labor data. Nonfarm payrolls rose by 130,000 in January, the largest increase in over a year, while the unemployment rate unexpectedly declined to 4.3%. The data prompted investors to scale back expectations for near-term Federal Reserve rate cuts. Markets now fully price in a Fed move by July rather than June, with the probability of a March cut seen at below 5%.

Sterling found some support from receding political uncertainty in the UK. Prime Minister Keir Starmer secured backing from senior cabinet ministers and the wider Labour Party following the resignation of his chief of staff, Morgan McSweeney, amid the Lord Peter Mandelson scandal. At the same time, investors continued to anticipate further monetary easing from the Bank of England. Although the BoE left interest rates on hold at 3.75% in a split decision, policymakers adopted a more dovish tone, signaling that inflation is likely to move back toward the 2% target from April.