FX.co ★ British Pound Depreciates After Labour Data

The British pound declined to $1.35 following fresh economic data indicating a marked slowdown in the labor market, bolstering arguments for a potential Bank of England rate reduction. Wage growth fell short of expectations, with private sector salaries—a critical gauge for the central bank—noting a slowdown as well. Additionally, the unemployment rate climbed to its highest point since 2021, while the number of payrolled employees recorded the most significant drop since 2020. This decline suggests early effects from increased National Insurance Contributions (NICs) and the recent rise in the National Living Wage. Although the Bank of England is largely anticipated to maintain the current interest rates at its policy meeting next week, the likelihood of a rate cut in August has grown. Traders are also keenly observing the upcoming release of monthly GDP data and the government’s spending review later this week for further insights into the UK's economic direction.