British Pound Weaker Following Unimpressive Jobs Data

The British pound traded in a relatively quiet tone against the dollar in the London session on Tuesday after bottoming from its recent decline near the critical 1.2000 support.

The single currency maintained a steady decline over the past few days following mixed jobs data. The UK’s unemployment rate came in near a 50-year low, but the number of those employed fell lower than the anticipated number in a Reuters poll. The Office for National Statistics (ONS) revealed that the number of job vacancies fell for the first time since mid-2020.

Apart from bonuses, wages rose by 4.7%, outperforming market expectations of 4.5%. However, the ONS explained that the real value of wages recorded its fastest drop since 2001 when documentation began.

British Pound Losing Ground Against Counterparts

At press time, the GBP/USD pair trades at 1.2060 after falling to the 1.2007 low in the Asian session today. Meanwhile, the EUR/GBP pair also traded at neutral levels at 0.8430, after the Sterling pared some losses against the Euro.

Meanwhile, the Bank of England (BoE) is monitoring reports from the labor market in hopes to see signs of inflationary pressures easing. However, analysts believe the mixed data is not enough to move the needle ahead of the central bank’s policy decision next month.

Commenting on the possible actions by the BoE in next month’s meeting, Michael Brown, head of market intelligence at Caxton, noted: “The labor market data was a bit of a mixed bag,” adding “I don’t think this is going to impact the Bank of England’s thinking in terms of interest rates.” Brown said he expects another 50 basis points (bps) rate hike in September.

Money markets have priced in an 83% chance of an additional 50 bps internet rate hike from the BoE in its policy meeting next month.