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Sterling (GBP) had a mixed performance against major currencies on Monday, with a quiet start to the week as investors stayed on the sidelines ahead of UK labor market data for the three months to the end of September due out on Tuesday. The employment data could significantly influence market expectations for the Bank of England’s (BOE) monetary policy decision in December.
Economists expect the unemployment rate to rise to 4.1% in the three months to September, up from 4.0% in August. Investors will also keep a close eye on average earnings data, a key measure of wage growth that drives consumer spending. Income growth is the main reason for high inflation in the services sector, and Bank of England officials will closely track this data when making interest rate decisions.
Average earnings, excluding bonuses, are expected to rise 4.7%, down from 4.9% in the prior month. Slower wage growth will boost expectations for further rate cuts from the Bank of England, as it would signal a further fall in services sector inflation. Conversely, higher wage growth would have the opposite effect. Average revenue growth, including bonuses, is estimated to rise to 3.9% from the previously reported 3.8%.
Last week, the Bank of England cut interest rates by 25 basis points to 4.75%, as expected. Bank of England Governor Andrew Bailey signaled a more gradual approach to easing policy and stressed the bank’s commitment to keeping inflation down to its ideal level of 2%.
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