Sterling Gains On Dovish Powell
📈 Pound Sterling Rises After Powell’s Surprise Dovish Tilt on Rate Cuts 🗓 Published: Monday, August 25, 2025 – 08:19 GMT
At the start of the week, during Monday’s European morning session, the Pound Sterling held firm near 1.3530 against the US Dollar — a gain sparked by unexpected remarks from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium. In his Friday speech, Powell struck a dovish tone, stressing the need to consider lowering interest rates.
Market Reaction Contrary to market expectations that Powell would reiterate a “wait‑and‑see” stance, he warned of mounting risks in the labor market, boosting investors’ risk appetite. This shift in tone put additional pressure on the US Dollar and 10‑year Treasury yields, with the Dollar Index (DXY) sliding toward a near four‑week low at 97.60 and the 10‑year yield hovering around 4.27%.
In the UK, with markets closed for the Summer Bank Holiday on Monday, Sterling volatility was expected to remain subdued.
Key Points from Powell’s Speech Powell noted: “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” He emphasized that downside risks to employment are increasing and, if realized, could quickly impact the labor market.
On tariffs, Powell said price pressures from such measures are unlikely to be sustained and would not have a lasting impact on inflation — unless they triggered a persistent inflationary dynamic, which he deemed improbable.
Bank of England’s View Also speaking at Jackson Hole, Bank of England Governor Andrew Bailey highlighted “acute challenges” facing the UK economy, rooted in reduced labor force participation after the pandemic and demographic trends from an aging population. Bailey warned these issues will not be resolved in the near term.
GBP/USD Technical Analysis