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Pound on track for worst run in almost a year amid market volatility
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Pound on track for worst run in almost a year amid market volatility
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After a week of volatile trading, the pound is on track for its longest run of losses in a almost a year.

Sterling is heading for its fourth weekly loss in a row, which would be its worst run since last September.

The pound has dropped by two and a half cents against the US dollar over the last month, amid a scramble for safe-haven assets. In mid-July, sterling was worth $1.30 – today, it is trading at about $1.275.

Last week’s Bank of England interest rate cut, and the prospect of one or two further rate cuts this year, pushed the pound down.

Sterling has also dropped for the last four weeks against the euro.

The pound’s weakness since mid-July comes after a strong start to the summer.

It jumped by three and a half cents in the first two weeks of last month, as investors appeared to welcome the incoming Labour government.

That rally has now fizzled out, with sterling hitting its lowest since 2 July yesterday.

“The Labour honeymoon is likely over,” said Shahab Jalinoos, the global head of currency research at UBS, via Bloomberg, adding: "The pound has finally reacted to what has for some time seemed like excessive long positioning.”

The stock market rollercoaster took another twist last night, as Wall Street posted its best day of trading in almost two years.

The S&P 500 share index rose 2.3% to 5,319.32, its biggest single-day jump since November 2022, as investors welcomed a drop in the number of Americans filing new unemployment benefit claims last week.

That eased some of the US recession worries that have been building in the markets.

In Tokyo, traders can finally relax after a week of highly volatile market moves.

The Nikkei 225 share index closed up about 0.5%. That ends a week that brought the Nikkei’s biggest plunge since 1987, followed by its best day since 2008.

Today had some drama, too – the index initially soared by 2%, after Wall Street’s strong session, before dropping into the red in afternoon trading.

The agenda
• 
9am BST: Italian inflation rate for July
• 1.30pm BST: Canadian jobs report for July
• 5pm BST: Russia’s Q2 GDP report and inflation data for July

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The Guardian view on wind energy and the UK: Labour plays catch-up
The Guardian view on wind energy and the UK: Labour plays catch-up
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Online Safety Act not fit for purpose after far-right riots, says Sadiq Khan
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