Pound Sterling slides further as weak UK data cements more BoE rate cuts
The Pound Sterling (GBP) underperforms its major currency peers, except the Japanese Yen (JPY), on Wednesday. The British currency faces selling pressure amid growing expectations that the Bank of England (BoE) will resume its monetary expansion cycle at the December meeting.
Traders expect the BoE to reduce interest rates further by 20 basis points (bps) this year, according Reuters. Market participants have raised dovish bets, following the release of the United Kingdom (UK) labour market data for the three months ending September, released on Tuesday.
The employment report showed that employers laid off 22K workers. This is the first time the overall labour force has been reduced since March 2024. Additionally, the ILO Unemployment Rate accelerated to 5%, the highest level seen since March 2021.
Meanwhile, consumer inflation expectations are also expected to cool off as growth in Average Earnings, a wage growth measure, has slowed. In three months ending September, Average Earnings Excluding Bonuses decelerated to 4.6% on an annualized basis, the slowest growth seen in over three years.
Contrary to accelerating BoE dovish expectations, policymaker Megan Greene stated at a UBS conference in London on Tuesday that the central bank should continue holding interest rates at their current levels, while expressing confidence that job conditions and wage growth will start improving from here. "I am worried about inflation persistence in the UK, means monetary policy needs to be more restrictive than otherwise," Greene said, and added, “wage settlements data for next year from surveys is higher than we would like to see.
Source: Fxstreet
