The pound sterling rose against the US dollar on Monday, extending Friday's gains as a weaker-than-expected US jobs report weighed on the greenback, while investors turned their attention to the Bank of England's policy meeting later this week. Sterling climbed 0.2 per cent to $1.3306, following a 0.6 per cent increase on Friday. Against the euro, the pound gained 0.3 per cent to 87 pence, recovering from last week's 87.69 pence — its weakest level since May 2023. Despite the rebound, the pound lost 3.8 per cent in July, marking its worst monthly performance since September 2022 amid concerns over the UK's fiscal health and softening economic indicators. "The mood music around GBP has been glum for some time," said Kamal Sharma, senior FX strategist at Bank of America, though he sees scope for sterling to strengthen against the euro by year-end as eurozone data worsens. Danske Bank's Mohamad Al-Saraf offered a more bearish outlook, forecasting the pound to weaken to 89 pence per euro within 12 months, citing mounting signs of economic weakness in the UK, particularly in the labour market. Markets are pricing in a 90 per cent chance of a 25-basis-point rate cut by the BoE on Thursday, with a total of 50 basis points of easing expected by year-end. Traders will be closely watching the central bank's guidance on interest rates and the pace of quantitative tightening. ING's Chris Turner said sterling could receive a lift if the BoE slows the pace of its bond sales, particularly of longer-dated Gilts. Attribution: Amwal Al Ghad English Subediting: M.S.Salama
