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Dollar Slides as Sterling Rallies on Fed Rate-Cut Bets

Markets forecast near certain Fed cuts in September following a softer jobs report with mixed inflation data.

U.S. dollar, Euro and Pound banknotes are seen in this illustration taken May 4, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
U.S. dollar banknotes are seen in this illustration taken May 4, 2025. REUTERS/Dado Ruvic/Illustration/ File Photo
Woman holds British Pound banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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Overview

  • Money markets see near certainty of a Federal Reserve rate cut in September after U.S. payrolls fell short and July CPI rose 2.7% year-on-year with core inflation at 3.1%.
  • Treasury Secretary Scott Bessent and President Trump increased political pressure for aggressive Fed easing by calling for a series of rate cuts and even legal action against the central bank chair.
  • Sterling climbed to three-week highs near $1.3580 as traders pushed back the next Bank of England cut to November following persistent wage growth and weaker hiring.
  • The dollar index dipped to 97.704, its lowest since late July, as investors repriced the widening gap between U.S. and U.K. policy paths.
  • Bitcoin surged above $123,000 to a fresh record peak as dollar weakness on Fed easing bets boosted demand for risk assets.