The pound fell below $1.34 on Friday after a much stronger than expected US jobs report revived bets that the Federal Reserve will raise interest rates in December.

Sterling dropped nearly 0.6% against the dollar, trading at $1.3371 after peaking near $1.3463 earlier in the session. By the close of trading it had fallen as low as $1.3356, down about 0.7% on the day.

The US economy added 165,000 jobs in October, far above the roughly 65,000 economists had expected, while September's figure was revised up from 29,000 to 60,000. The unemployment rate fell to 4.1%. The figures pointed to a solid labour market and cleared the path for further tightening by the Federal Reserve, sending the dollar higher against its major rivals.

The timing was unkind for sterling. Just a day earlier, the Bank of England had raised its own benchmark rate by a quarter point to 4%, its first increase since August 2023, on an 8-1 vote of its Monetary Policy Committee. The decision had initially supported the pound, which climbed towards $1.35, its highest level since mid-September.

But the Bank's rate rise was not enough to hold sterling up once the US figures landed. The pound's fall wiped out a six-session rally that had carried it from around $1.33 to $1.3490, and traders noted that the failure to break decisively above $1.35 had left it vulnerable to a pullback.

The Bank of England has signalled that at least one more rate rise is likely if the conflict in the Middle East continues, and it expects inflation to peak at close to 5% next year. Its next rate decision is due on 17 December, eight days after the Federal Reserve's meeting on 9 December.

[Source: fxstreet.com](https://www.fxstreet.com/news/british-pound-cracks-13400-as-blowout-us-nfp-revive-fed-hike-bets-202611061548) | [Source: tradingnews.com](https://www.tradingnews.com/news/gbp-usd-drops-to-13556--as-a-hiking-fed-outweighs-the-boes-4-percent-rate-and-its-4-percent-inflation-path)