2026.02.1110:13:33UTC+00Pound Nears $1.37 as Dollar Softens and UK Political Risks Ease

The British pound climbed toward $1.37, recovering from recent volatility and moving closer to its late-January peak of $1.387, as the US dollar softened ahead of the closely watched January jobs report. Markets expect the data to show a modest increase in hiring, though the outlook remains uncertain after several US officials, including White House economic adviser Kevin Hassett, cautioned that job growth could slow in the coming months.

Sterling also drew support from an easing of political tensions in the UK. Prime Minister Keir Starmer secured backing from cabinet ministers and the wider Labour Party following the resignation of his chief of staff, Morgan McSweeney, amid controversy involving Lord Peter Mandelson.

At the same time, markets continued to price in additional rate cuts from the Bank of England. While the central bank held its benchmark interest rate at 3.75% in a split decision, policymakers struck a more dovish tone, indicating that inflation is likely to ease back toward the 2% target from April onward.