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BBH says UK jobs softness may cap GBP gains

Unemployment held at 4.9% for a third straight month in June, while private-sector regular pay growth slowed to 2.8% year-on-year.

Reported · Written up by our desk · Major Pairs

HousingWire reports that Brown Brothers Harriman analyst Elias Haddad described June UK labor data as soft, with unemployment remaining at 4.9% for a third consecutive month. He also pointed to a slowdown in private sector regular pay growth to 2.8% year-on-year, the weakest reading since October 2020.

According to FXStreet, Haddad said markets are pricing 60 basis points of Bank of England rate hikes over the next 12 months, which he views as too aggressive. He argued that the UK’s negative output gap makes rate hike expectations vulnerable to a dovish repricing.

For now, Haddad said the UK’s favorable growth-to-inflation mix should still provide support for the British pound. FXStreet also noted that GBP/USD was hovering around the 1.3550 area, limiting upside amid the weaker jobs backdrop.

Latest closeGBP/USD 1.354 ▲0.3%

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