Sterling Firms as Weak U.S. Jobs Data Weighs on Dollar Ahead of CPI

Sterling edged higher on Monday as weaker U.S. labor data continued to pressure the dollar. GBP/USD rose 0.07% to around $1.3503, while EUR/USD also gained, reflecting a broader shift in U.S. rate expectations after July payrolls unexpectedly contracted and previous gains were revised lower.

The move in sterling was largely dollar-driven, with no major U.K. data releases scheduled for Monday. Markets are now turning to Wednesday’s U.S. CPI report, which could provide a clearer signal on whether the Federal Reserve is likely to keep rates unchanged through the year.

Trader outlook: Softer-than-expected U.S. inflation could reinforce dollar weakness and provide further support for GBP/USD, while a stronger core CPI reading could revive Fed tightening expectations and limit sterling’s gains. Traders may focus on U.S. inflation and short-term rate differentials rather than U.K.-specific catalysts.