Sterling falls after UK employment rises 147K but average earnings slow to 4.3%, below the 4.5% consensus expected by markets.
The British Pound declined against the USD on Tuesday, erasing gains despite a stronger-than-expected UK labor market report. GBP/USD dropped from above 1.3450 to near 1.3350, breaking below key moving averages and extending a four-day losing streak. The session low marked the weakest performance among major currencies, reversing over a third of its mid-July rebound from 1.3150.
While employment surged by 147K in the three months to May—beating the prior 100K—and the claimant count rose just 6.7K in June, below the 28.3K consensus, wage growth disappointed. Average earnings including bonuses slowed to 4.3%, missing the 4.5% forecast and reinforcing the Bank of England’s focus on cooling pay pressures. The unemployment rate dipped to 4.9%, below the 5% expectation, but markets largely dismissed the data outside of wage trends.
The Bank of England held rates at 3.75% in June, with two dissenters favoring a hike to 4.00%. Rate expectations have since softened, with markets now pricing in fewer hikes than previously anticipated during the peak of inflation concerns.