Sterling Heads for Strongest Weekly Gain Against Dollar in Three Months

The British pound is on track to post its strongest weekly performance against the US dollar in three months, supported by easing domestic political uncertainty and renewed pressure on the greenback following weaker US labor market data.

During Friday trading, sterling edged up 0.1% to $1.3357, extending its weekly advance to approximately 1.2%, its best performance since early April.

The pound’s recent strength comes amid a calmer political backdrop in the United Kingdom, after concerns over fiscal discipline and government stability began to ease. Markets were reassured following remarks by Labour figure Andy Burnham, who signaled his commitment to existing fiscal rules, dampening speculation that a future government could loosen borrowing constraints or abandon current budgetary frameworks.

The reduction in perceived political risk helped improve investor sentiment toward UK assets, supporting sterling alongside broader market positioning.

According to Carl Steiner, Head of Research at SEB, the decline in the risk premium attached to British assets has been a key driver behind the currency’s recovery.

“Lower political risk has supported the pound, alongside improving investor confidence,” Steiner told Reuters.

At the same time, the US dollar has faced headwinds from softer-than-expected American labor market data, which weighed on expectations for monetary tightening and contributed to renewed selling pressure on the currency.

Together, these dynamics have allowed the pound to outperform major peers on the week, marking a notable rebound after a period of relative underperformance in global currency markets.