Pound Falls, UK Jobs Data Fuels BoE Rate Cut Expectation
Investors sold down the British pound, with the US dollar taken as a replacement amidst disappointing UK job data, and now markets are anticipating that the Bank of England will be disposed to cut the rate.
FX data revealed that Sterling fell below $1.33, hovering at its weakest level as markets reacted to weaker wage growth, fuelling Bank of England rate cut expectations.
Sterling gave back about half of its pre-weekend gains yesterday at around $1.3315, with the retracement near $1.3300. The disappointing jobs data has sent sterling slightly below $1.3255, its lowest level since August.
The UK reported steady average weekly earnings growth accelerated to 5.0% from a revised 4.8% (from 4.7%) three months year-over-year, while excluding bonuses, it slipped to 4.7% from 4.8%.
The International Labour Organisation measure of unemployment ticked up to 4.8% from 4.7%, its highest since Q1 21. Employment growth slowed to 91k over the months through August compared to 232k previously, its slowest since April.
September jobless claims rose by 25.8k after falling a revised 2k in August (revised from 17.4k). In the swaps market, the odds of a rate cut this year from about 28% yesterday to almost 39% today.
Hence, the Sterling drifted a little bit lower during the trading session as US dollar put up a fight against most currencies. British pound has been resilient against the United States dollar in comparison to multiple other currency such as the euro, Canadian dollar, and many others.
The GBP/USD pair slipped while FX traders waited for a statement from Jerome Powell and other Federal Reserve officials. It was trading at 1.33, down from the September high of 1.3725.
The latest UK jobs report showed regular pay growth eased to 4.7% in June–August 2025, down slightly from 4.8% in the previous three months and marking the weakest pace since March–May 2022.
Comparably, other key indicators suggest the UK labour market is stabilising: the unemployment rate rose slightly to 4.8%, above forecasts of 4.7%, while declines in payroll numbers and vacancies appear to be levelling off.
Still, the British pound sits lower across the board versus the US dollar, euro and yen. Analysts said the wage numbers might be more mixed at first glance. But onbalance, it still points to moderation in price pressures and keeps the Bank of England on track to cut rates.
Sampled market projections revealed that the BoE’s next full 25 bps rate cut is slated for March next year while odds of a move in February next year have gone up a fair bit. FX analysts said they are seeing GBP/USD slump further on the day in falling to 1.3285 now after the report. #Pound Falls, UK Jobs Data Fuels BoE Rate Cut Expectation#
