Pound Surges as Fed's Waller Softens Rate Hike Bets Ahead of NFP

The British Pound has gained strength against the US Dollar as Federal Reserve Governor Christopher Waller signaled a more neutral stance on monetary policy. In a shift from expectations, Waller indicated that if upcoming inflation data shows cooling, he would allow the disinflation process to resume.

His comments have triggered a repricing in money markets, with odds of a rate hike shrinking to 54% from over 60%. The US labor market appears solid, with the ISM Services PMI exceeding forecasts at 55.4 in August.

The number of Americans filing for unemployment benefits rose slightly above expectations, and announced plans to hire by companies have increased 37% year-over-year. Meanwhile, Bank of England Chief Economist Huw Pill has been hawkish, suggesting a need to raise the Bank Rate to 4%. The Pound Sterling is currently trading at 1.3535 against the US Dollar.