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2025-08-01 22:03:48
Why did the British pound rebound strongly against the US dollar, regaining lost ground after the disappointing non-farm payroll data? ⑴ July's US non-farm payroll data fell short of expectations, with only 73,000 new jobs added, causing significant market volatility. ⑵ This weak data significantly increased the likelihood of a September Fed rate cut, with market expectations of a rate cut soaring from 45% before the data release to nearly 100%. ⑶ The sharp shift in expectations for a rate cut led to a significant weakening of the US dollar and a significant drop in US Treasury yields, particularly in short-term yields, which are more sensitive to monetary policy. ⑷ This boosted the British pound against the US dollar, causing a strong rebound and returning above the 1.32 mark. ⑸ Although Trump's tariff remarks have raised concerns about the trade outlook, the focus in the foreign exchange market has shifted to expectations of a policy shift by the Federal Reserve. ⑹ The British pound's strong rebound also reflects that, in the current market environment, relative interest rate expectations are a key factor in determining foreign exchange trends. ⑺ The market will closely monitor upcoming US inflation data and Fed Chairman Powell's speech at the Jackson Hole symposium for further policy clues.
