LONDON: The British pound edged lower against both the euro and US dollar on Friday, with markets weighing talks, and escalations, in the Middle East and awaiting the closely watched monthly US payrolls report due later in the day.
Sterling was 0.1 percent lower against the dollar at USD1.3438. Against the euro, the pound was similarly lower at 85.76 pence.
Investors were cautious about diplomatic efforts to end the Iran war and reopen the crucial Strait of Hormuz, especially as tensions flared up again in the Middle East.
An attack by Yemen’s Houthis on southern Saudi Arabia wounded 11 civilians on Thursday, a military official said, as the kingdom warned that coordinated attacks by the Houthis and Iran-backed Iraqi militias were imminent.
Brent crude futures were last slightly lower on the day at USD82.16 per barrel.
Elsewhere, US nonfarm payrolls are forecast to have risen by 80,000 last month after an increase of 57,000 in June, according to a Reuters survey of economists. The data could provide clues about the Federal Reserve’s interest rate path ahead as markets are weighing the chance of a potential interest rate hike.
Domestic catalysts for Sterling are meanwhile few and far between.
“The next big sterling catalyst that we are looking for is actually that everything else in the world calms down. When that happens, what we tend to see is attention switches back to some of the UK fiscal concerns,” Nick Rees, head of macro research at Monex Europe, said.
“If Middle East tensions can cool once we’re through payrolls, then we think attention can turn back to some of these UK fundamentals, which aren’t good for the pound,” he said.
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