The data released on the eve showed that the British economy created the largest number of jobs in almost a year.
Against this background, the GBP / USD pair reached local highs around 1.3070, and the derivatives market lowered expectations for the Bank of England interest rate cut by 25 basis points next week from 70% to 62%.
According to information from the National Statistical Office (ONS), the number of working Britons in September - November increased by 208 thousand, to 32.9 million. This is the maximum increase from November 2018 - January 2019. Moreover, analysts polled by Reuters expected the indicator to grow by 110 thousand.
In the period under review, employment in the country reached a record high - 76.3%. The number of unemployed decreased by 7 thousand, to 1.31 million people.
At the same time, the growth in average wages excluding bonuses slowed down to 3.4% and became minimal from February - April 2019.
"While wage growth has been slowed since last summer, and inflation remains moderate, household incomes continue to grow in real terms," said ONS spokesman David Freeman.
A number of members of the Bank of England's Monetary Policy Committee recently stated that additional incentives may be required, including lower interest rates. This is necessary to support the weakening British economy, although many analysts say that BoE may so far refrain from such steps if the data show an economic recovery in December.
Surveys of purchasing managers, the results of which will be announced on Friday and will give a clue to whether this rebound has occurred.
"Labor market data point to a better forecast for the UK economy than many feared in recent weeks, when monthly GDP figures fell short of expectations amid signs of slowing retail sales. A stronger than expected employment report could give the Bank of England an excuse not to cut interest rates next Thursday, "said Edward Park, Deputy Director of Investment at Brooks Macdonald.
"The Bank of England may postpone its decision to cut interest rates until the end of this year to evaluate how fiscal stimulus plays a role. GBP / USD will naturally grow in this case," said Nomura strategist Jordan Rochester.
However, some experts have a different point of view and believe that the pound is on shaky soil.
"Sterling remains vulnerable in the short term, given positioning," said Societe Generale specialist Keith Jax, referring to the net long positions that speculators have taken on the pound this year.
Currently, pressure on the pound is exerted not only by the prospect of easing monetary policy in the UK, but also by the uncertainty associated with Brexit.
In this regard, the United Kingdom is due to leave the EU on January 31. Earlier, the Brexit deadline was already postponed due to the impossibility of ratifying the agreement on the conditions for the country's withdrawal from the alliance.
Before, the House of Lords passed the bill on the agreement on the UK exit from the EU to the House of Commons, introducing five amendments to the document. This was the first defeat of the conservatives after the election. However, these amendments may be rejected since the Tories have a majority in the House of Commons. Therefore, the bill has every chance of getting stuck in parliament for a long time.
