UK labor market cooling and subdued wage growth diminish expectations for Bank of England tightening this year.
The British pound weakened against the euro after UK labor data showed a cooling jobs market and minimal wage pressures. Payrolled employment dipped slightly, with declines in consumer services offsetting gains in government hiring, while private sector employment remained flat.
The unemployment rate edged higher, though data reliability issues persist. Wage growth remains subdued, reducing the likelihood of Bank of England rate hikes in 2024. Markets still price 60 basis points of tightening next year, but this is expected to be gradually unwound.
EUR/GBP rose toward 0.8570-0.8580, reflecting shifting expectations amid softer economic signals. Energy prices may influence the timing of further adjustments.