Sterling today: Pound firms as soft U.S. jobs data weighs on dollar

Sterling strengthened on Monday as the euro also gained, following Friday's disappointing U.S. job market report. This positive trend was driven by the belief that the Federal Reserve would maintain interest rates until the end of the year. The GBP/USD pair rose to $1.3503, while EUR/USD climbed to $1.1565. FX strategist Francesco Pesole from ING explained that the weak U.S. payrolls data, which showed a 20,000 job loss and a 100,000 revision drop, negatively impacted the dollar.

However, there is still room for further rate cuts in September, December, and April if the Fed's stance proves to be dovish. ING expects the next major test for the dollar will be the U.S. CPI release on Wednesday, with a forecast of 0.1% month-on-month inflation, below the 0.2% consensus. The euro, on the other hand, is largely influenced by the U.S. dollar, and a softer-than-expected CPI print could strengthen the case for further dollar weakness.

The ECB has signaled a potential September rate hike, but any hotter-than-expected core CPI print could hinder the dollar's gains and limit the upside for both sterling and the euro.