LONDON (Reuters) -The pound hovered largely unchanged on Monday, having posted its biggest one-day rally against the dollar in two weeks on Friday, following surprisingly weak U.S. employment data that has cemented expectations for a U.S. rate cut this month.

Sterling was last unchanged on the day at $1.3513, having risen by 0.5% on Friday, when the dollar came under heavy pressure following the August nonfarm payrolls report that showed just 22,000 jobs were created last month and far fewer were created in the prior months, too.

Traders are fully expecting a quarter-point cut from the Federal Reserve when it meets next week and a high chance of identical cuts in October and December.

The Bank of England, which also meets next week, is barely expected to deliver even one rate cut in the remainder of this year, given UK inflation remains well above the central bank's 2% target and the economy is slowing, but without obvious signs of a more serious weakening.

This divergence creates a theoretical advantage for sterling and UK assets in general, as investors stand to benefit from higher British interest rates versus those elsewhere.

Sterling shrugged off UK Prime Minister Keir Starmer's cabinet reshuffle on Friday after the resignation of his deputy, which did not affect finance minister Rachel Reeves.

The pound was also steady against the euro, which traded at 86.8 pence.

"There's no UK data of note this week and few Bank of England speakers. We suspect euro/sterling can trade in a 86.50-87.00 range this week, given that next week's BoE meeting and news on quantitative tightening plans will be far more interesting," strategists at ING said in a note.

Against the Japanese yen, sterling rallied to one-month highs above 200, after Japanese Prime Minister Shigeru Ishiba said he would resign on Sunday.

Ishiba said he was taking responsibility for his Liberal Democratic Party's election losses earlier this year.

(Reporting by Amanda Cooper; Editing by Hugh Lawson)

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  Jobseeker numbers surge at fastest pace in five years

  Matt Oliver Mon 8 September 2025 at 6:03 am BST 4 min read

  

  The number of people seeking work has jumped at its fastest pace in five years as company bosses brace for Rachel Reeves to impose more tax rises at the next Budget.

  In August, the supply of jobseekers rose by the largest amount since November 2020 as businesses laid people off and nervous managers cut back on hiring.

  Recruiters blamed “weak confidence around the economic outlook and concerns over costs”, according to the survey by KPMG and the Recruitment & Employment Confederation (REC).

  The figures are a fresh blow to Ms Reeves, the Chancellor, as the Government scrambles for ways to boost economic growth and cut the benefits bill for unemployed people.

  But the Chancellor is widely expected to increase a range of taxes in her Budget this November, to fill a black hole in the public finances, piling further pressure on struggling companies.

  It comes after she already presided over a record £40bn tax raid in her first major fiscal statement last year, including a rise in employer National Insurance contributions that critics branded a “jobs tax”.

  In the forthcoming Budget, Ms Reeves is said to be expanding her National Insurance raid in a move that could impact 190,000 workers, with family doctors, lawyers and solicitors, accountants and financial advisers hit the hardest.

  Jon Holt, of KPMG, said the “subdued economic outlook” meant executives continued to “pause their future spending plans, including hiring”.

  He added: “Given the speculation around upcoming Budget measures, it’s unlikely we’ll see a significant shift in recruitment patterns in the near term.”

  Neil Carberry, of the REC, added: “Employers need a shot of confidence along with their seasonal flu jabs this autumn.

  “There is certainly potential out there – but with fewer vacancies and more candidates looking for work, the overall picture is still subdued.

  “All eyes are now on the autumn Budget, in the hope that the Chancellor won’t do any further damage to the labour market with costs on hiring. For the economy to thrive, the Budget must recognise the need for investment in people.”

  The KPMG and REC survey, based on responses from 400 recruitment consultancies, found that demand for staff continued to fall in August.

  There was a bigger decline in permanent vacancies than in temporary job opportunities, the data showed.

  Meanwhile, pay grew at only “muted” levels.

  

  The increase to starting salaries was the weakest for four and a half years and “only marginal”, it found, while wages for temporary workers remained “much slower than the historical trend”.

  This was partly because of the rising number of job seekers, KPMG said, which meant more candidates were available for each post, putting employers under less pressure to offer more competitive pay.

  The steepest drop in job vacancies was in the South East by far, the survey also found, with construction the only industry to record an increase in demand for workers.

  Retail and hospitality, meanwhile, registered drops in permanent vacancies.

  Separately on Monday, MPs warned that the Department of Work and Pensions (DWP) “needs to rebuild trust with employers” as it seeks to get more people back into work.

  A new report by the Work and Pensions Committee welcomed efforts by the Government to refocus Jobcentres on employment, rather than monitoring benefits, but called for more engagement with local employers.

  They also argued that unemployment benefit claimants should be given three months to find work, rather than four weeks, before facing sanctions, preventing an “any job” approach that often led to poor levels of retention.

  Debbie Abrahams, a Labour MP and the committee’s chair, said: “Providing the right support to get people back into the workplace assists not only individual claimants, but businesses and wider society too.

  “We need to help end the cycle of claiming benefits, being pushed into any job, and losing it when it is unsuitable or insecure.

  “This undermines the service the Jobcentre is meant to be providing for people and businesses.”

  Following Sir Keir Starmer’s ministerial reshuffle last week, the DWP is set to become a retooled “growth ministry” under Pat McFadden.

  He will be tasked with boosting Britain’s lacklustre economic growth and tackling a worklessness crisis that is being partly driven by a surge in unemployed graduates.

  According to official data, the number of 16 to 24-year-olds classed as not in education, employment nor training (Neet) has surged from 793,000 to 923,000 in the past five years.