Sterling nears 1.3600 as US-driven momentum overshadows UK labor data showing pay growth above BoE forecasts.
The British Pound climbed to its highest level since early May, trading near 1.3550 against the Dollar on Tuesday, driven by external factors rather than domestic economic data. The move pushed the currency above key moving averages, signaling a structural shift in momentum after a 300-pip recovery from early August lows near 1.3300.
UK labor market data released Tuesday offered mixed signals for the Bank of England. Regular pay growth accelerated to 3.5% in the three months to June, exceeding consensus and the BoE’s 3.3% Q4 forecast, while total pay eased to 4.1%. Employment growth slowed sharply to 83K from 147K, and the unemployment rate held at 4.9%, defying expectations for a decline to 4.8%. Vacancies fell to 707K, the weakest reading since mid-2021.
The currency showed little reaction to the data, with GBP/USD trading in a narrow 35-pip range and closing slightly lower. The BoE’s Monetary Policy Committee may view the pay growth figures as marginally hawkish, though weaker employment trends could temper concerns over persistent inflation.