The British pound edged down to around $1.352, retreating from Monday’s more than three-month high of $1.354, as evidence of a cooling UK labour market weighed on the currency. The unemployment rate held at 4.9% in June, overshooting expectations for a decline to 4.8%, while job vacancies dropped to 707,000 in the three months to July, their lowest level since 2021. At the same time, private-sector regular pay growth slowed to 2.8% year-on-year, its weakest pace since late 2020.
The softer labour market data reinforces the case for the Bank of England to leave interest rates on hold, though markets are still pricing in some degree of monetary tightening by year-end. Investors’ attention now turns to Wednesday’s inflation figures for further guidance on the policy outlook.
Elsewhere, renewed US–Iran tensions pushed oil prices higher and bolstered the US dollar as investors sought safe-haven assets. Despite Tuesday’s pullback, sterling remains modestly higher on a year-to-date basis, supported by broader dollar weakness, fading expectations of additional Federal Reserve rate hikes, and relatively contained oil prices.
