FX.co ★ Pound Falls as Weak Labor Data Fuels BoE Rate Cut Expectations

The British pound declined to $1.31 following labor market data that fell short of expectations, fueling anticipation of an interest rate cut by the Bank of England next month. In the third quarter, regular pay growth slowed to 4.6%, marking its weakest pace since February to April 2022. Total pay, including bonuses, increased by 4.8%, which was just below the forecasted 4.9%. Additionally, the unemployment rate rose to a four-year peak of 5.0%, surpassing the anticipated 4.9%. This increase was driven by a rise in unemployment coupled with a decline in employment for the first time since early 2024. Although the Bank of England kept interest rates steady last week, it indicated that a rate cut in December is still on the table as policymakers evaluate the persistence of domestic inflation pressures.