The British pound softened against the euro following Tuesday’s UK labour market data release that revealed diminishing wage pressures and cooling employment conditions. ING’s Chris Turner reported a firmer EUR/GBP cross as the figures suggested the Bank of England faces reduced pressure to raise interest rates through 2024. Economist James Smith from ING emphasized the jobs market is showing clear signs of cooling with minimal wage growth momentum, undermining the case for further monetary tightening.
The data represents a significant shift in the UK’s inflation battle, as stubborn wage growth has been a primary concern for BoE policymakers in recent months. Traders are now repricing rate expectations downward, with money markets adjusting to reflect fewer potential hikes this year. The pound’s weakness particularly manifested in the EUR/GBP pair as currency markets absorbed the softer employment picture.
FXnCO Insight
Sterling longs should reassess positions immediately as cooling UK wage data materially reduces the probability of Bank of England rate hikes, supporting a firmer euro against the pound in the near term.
Source: FXStreet