The British pound experienced a weakening against the US dollar, falling to $1.31, triggered by disappointing labor market data. This data has strengthened market expectations for a Bank of England interest rate cut in the upcoming month. Investors are now closely watching upcoming Q3 GDP data and the Autumn Budget 2025 for further indications of the UK’s economic health.
- Regular pay growth slowed to 4.6% in the third quarter, the weakest since February–April 2022.
- Total pay, including bonuses, rose 4.8%, slightly below forecasts of 4.9%.
- The unemployment rate climbed to a four-year high of 5.0%, exceeding expectations of 4.9%.
- Employment fell for the first time since early 2024.
- The Bank of England signaled that a rate cut in December remains possible.
The recent economic figures suggest potential challenges for the British pound. Slower wage growth and rising unemployment put downward pressure on the currency’s value. The possibility of a Bank of England interest rate cut further reinforces this bearish outlook, as lower interest rates typically make a currency less attractive to investors. These factors combined indicate a period of uncertainty and potential weakness for the British pound.