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Sterling recovers after UK labor data
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Sterling recovers after UK labor data
Oct 26, 2024 2:21 AM

Odds of BOE rate cut in September recede Markets await UK growth data Sterling rose in European trade on Tuesday against a basket of major rivals, holding its ground above three-week lows against the US dollar following important UK labor data.

The data confirms the resilience of the UK economy, and bolsters expectations the Bank of England will maintain interest rates unchanged at next weeks meeting.

The Price

The GBP/USD rose 0.3% today to $1.3108, with August 21 lows at $1.3058.

The pound fell 0.45% on Monday, the second loss in a row, as the dollar rebounded against most major rivals.

UK Labor Sector

Government data showed the UK economy added 265 thousand new jobs in the three months ending July, passing estimates of 123 thousand easily, while unemployment fell to 4.1% from 4.2%.

The excellent data showcases the strength of the UK labor sector and will likely lead BOE policymakers to maintain interest rates unchanged for an extended duration

UK Rates

Following the data, the odds of a Bank of England interest rate cut in September fell to just 10%, while the odds of such a cut in November were below 50%.

Now traders await important UK monthly growth data on Wednesday to gather more clues.

Analysis

ABN Amros chief forex analyst said the recent UK data showed the persistent inflationary pressures in the economy, with stable wages growth likely posing inflationary risks in the medium term.

The bank expects sterling to outperform both the US dollar and the euro in the short and medium terms.

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