Pound’s Big Rally Fizzles as Rate Cut, Market Turmoil Take Toll

Sterling won new fans after the Labour Party’s election win. Now, currency traders are looking for reasons to stay optimistic as pressure mounts.

Investors were already cautious after the Bank of England’s first interest-rate cut since 2020 at the start of the month, but they didn’t foresee the weak US data and ructions in Japan’s markets that triggered a global rout in the days that followed. In the UK, anti-immigration riots and the prospect of tax hikes have dimmed the post-vote euphoria and done nothing to slow the pound’s tumble from a one-year high.