Sterling Hits Three-Week Low Amid Fed Rate Cut Bets and UK Economic Data

The pound hit a near three-week low against the dollar as traders scaled back expectations of a significant U.S. rate cut next week and awaited vital UK economic data. Sterling fell to $1.30745, its weakest since August 21, under pressure alongside other major currencies as the U.S. dollar recovered.

The pound hit a near three-week low against the dollar on Monday, with traders adjusting their bets on the possibility of a substantial U.S. rate cut next week. Sterling fell 0.42% to $1.30745, marking its weakest point since August 21.

Other major currencies also experienced pressure as the dollar rebounded from declines last week. This followed Friday's data indicating U.S. employment grew less than expected in August, suggesting a steady slowdown in the labor market. Bets on a 50-basis-point rate cut from the Federal Reserve were over 50% on Friday but fell to 25% on Monday.

Investors are now focused on UK labor market data, British GDP figures for July, and U.S. inflation data due this week for hints on monetary policy direction. UK's labor market noticeably cooled last month, with job placements dropping and pay growth slowing. Tuesday's official data are anticipated to show solid employment growth and further moderation in pay growth.

(With inputs from agencies.)