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British pound softens as UK jobs data tempers rate hike expectations
ING expects the sterling money market to gradually unwind around 60bp of priced-in Bank of England tightening into next year, with EUR/GBP tilted toward 0.8570 to 0.8580.
The British pound eased after UK labor data pointed to a cooler jobs market and minimal wage pressure, according to a note shared by ING’s Chris Turner via FXStreet. ING economist James Smith said the jobs report was not seen as “earth-shattering,” noting that while payrolled employment fell slightly, government hiring remained active, consumer services employment continued to decline, and the remaining private sector looked flatlining. The assessment suggested little impetus for the Bank of England to raise rates this year.
The commentary also addressed positioning in money markets, saying sterling still prices about 60bp of Bank of England tightening into next year. Turner expected that amount to be priced out over the following three to six months, though the timing could be influenced by energy prices.
FXStreet added that attention is set to move to the next UK data release, with July CPI expected to be a key driver, particularly if the year-on-year services figure comes in lower and reinforces the case for a more dovish BoE stance.