The British Pound is under significant pressure, falling to multi-week lows against the US Dollar as weaker-than-expected UK labor market data fuels speculation of imminent interest rate cuts by the Bank of England. This has led to increased bets on rate reductions as early as March, further weighing on the Pound’s value.
- The British pound fell below $1.36, the weakest level since February 5.
- UK average weekly earnings growth slowed to 4.2%, below forecasts.
- The UK unemployment rate climbed to 5.2%, the highest level since early 2021.
- Traders are fully pricing in a 25-basis-point BoE rate cut in April, with a 76% probability of a March cut.
- The number of people claiming jobless benefits rose to 28.8K in January.
- Annual wage growth moderated, dropping to its lowest level in almost four years.
The weakening labor market conditions are contributing to expectations of monetary policy easing, thus diminishing the appeal of the British Pound. Traders are closely monitoring upcoming inflation data and statements from central banks for further direction, as these events will likely impact future rate decisions and subsequent Pound performance.