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Pound slips below 1.3550 against dollar after weaker UK labor data

Sterling is also set to react to upcoming UK CPI inflation, with traders weighing whether wage slowdown reduces the odds of a BoE rate hike this year.

Reported · Written up by our desk · Major Pairs

The British pound weakened against the US dollar in early Asian trading, with GBP/USD falling to around 1.3535 after UK labor-market data came in softer than expected, according to FXStreet. The UK unemployment rate held at 4.9% for the three months to June, edging above the 4.8% consensus. Average earnings including bonus fell to 4.1% in the three months to June, down from 4.4% in the prior three-month period. Some economists said the pay slowdown could make it harder for the Bank of England to raise interest rates later this year. Money-market pricing cited by FXStreet shows one BoE rate hike projected by year-end, lifting the bank rate from 3.75% to 4.0%.

FXStreet also noted that expectations for a potential US rate move have shifted, which could influence the dollar. The outlet cited CME FedWatch odds for a September Fed hike at 35%, down from 47% a month earlier. Separately, it pointed to recent US Retail Sales weakness and softer inflation prints as part of the backdrop. ING economist James Smith said the combination of weakness in private sector hiring and wage growth keeps the bar high for a 2026 rate hike, absent a severe and prolonged energy-price surge, while FXStreet added that traders are bracing for UK CPI later on Wednesday.

Latest closeGBP/USD 1.354 ▲0.3%

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