The British pound climbed to $1.335, marking its highest level in nearly a month, following the release of stronger-than-anticipated UK labor market data. The unemployment rate dropped to 4.7% in the three months ending in August, the lowest since July 2025, while regular wage growth picked up to 3.7%, slightly surpassing market forecasts of 3.6%.
The positive labor data adds to a series of upbeat economic reports from last week, including a 0.1% expansion in the UK economy in August and an unexpected narrowing of the trade deficit. These signs suggest the economy is performing better than initially expected.
Investors are now anticipating that the Bank of England (BoE) will raise its Bank Rate to 4% at its November 5 meeting. The BoE has been the only major central bank yet to begin tightening monetary policy, but Governor Andrew Bailey’s recent remarks hint at a potential rate hike, noting that prolonged economic challenges may necessitate policy adjustments.