Sterling Depreciates Following US Payroll Release

The British pound weakened towards $1.2 at the start of December, after gaining more than 5% in November, as investors rushed for the US dollar following a strong US jobs report.

The data showed US employers added more jobs than expected in November, while wage growth picked up to a ten-month high, trimming bets that the Federal Reserve will soon slow its aggressive interest-rate hikes.

Domestically, investors believe the Bank of England might not end up hiking as aggressively as feared.

Last week, Bank of England Deputy Governor Ramsden said he was backing more interest rate hikes, but would consider cutting rates if the economy developed differently to his expectation.

In addition, MPC member Tenreyro said earlier in the month she saw rates on hold next year and then falling in 2024, while Dhingra has warned that an over-tightening of policy could stoke a deep recession.