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Pound Hits Seven-Week Low, Powell and Payrolls Boost Dollar

LONDON, Feb 5 (Reuters) - The pound fell to its lowest since mid-December on Monday after a very strong U.S. jobs report and comments from Federal Reserve Chair Jerome Powell combined to boost the dollar.

Sterling fell to $1.2581, its lowest since Dec. 17, and last traded 0.32% lower at $1.2593.

Against the euro the pound was little changed , with a euro buying 85.39 pence.

Data on Friday showed that U.S. job growth accelerated far more than expected in January and wage growth grew solidly. The figures caused investors to reconsider their bets that the Fed could cut rates in March, boosting bond yields and the dollar.

Yields and the dollar were further helped higher on Monday by comments from Powell, who said in an interview, released on Sunday and recorded on Thursday, that the Fed would "give it some time" before cutting interest rates.

The dollar index , which tracks the currency against major peers including the pound, rose to its highest since Nov. 17 on Monday at 104.29.

"Cable (the pound/dollar rate) has sort of gone nowhere in terms of the range - it's been clinging to this $1.26 to $1.28 range," said Jane Foley, head of FX strategy at Rabobank.

"Right now as the market prices out Fed rate cuts, cable's likely to be at the bottom of the range," said "But once the Fed starts to cut we think it can go higher."

Foley said Rabobank expected the first Fed rate cut to come in June, but for the Bank of England to wait until September.

The pound's fall on Monday came despite some upbeat economic data. Figures showed that the unemployment rate was likely much lower late last year than previously thought, at 3.9% instead of 4.2%.

Separate survey data showed that British services businesses started 2024 on a robust footing, with a solid inflow of new orders and the fastest hiring in six months.

Reporting by Harry Robertson; Editing by Alex Richardson

Source: Reuters

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