Pound Tumbles as Weak UK Employment Data Sparks Interest Rate Hesitation

The British Pound (GBP) is trading lower against the US Dollar (USD) due to weak UK employment data, according to TMGM. The GBP has lost 0.1% and fallen to near 1.3530 against the USD during the European trading session on Tuesday.

Analysts at ING characterized the latest UK labour figures as offering 'nothing particularly earth-shattering,' but still reinforcing a picture of a cooling jobs market. They noted that payrolled employment is down a touch, while cautioning that this headline masks big differences between government, consumer services, and the remaining private sector.

The unemployment rate has increased, although ING stressed that this data should be taken with a pinch of salt due to existing problems with the labour force survey. The analysts concluded that the jobs market remains cool, and wage pressures are minimal, suggesting little impetus for the Bank of England (BoE) to hike rates this year.

Investors will focus on the UK Consumer Price Index (CPI) data for July, which will be released on Wednesday. The CPI measures consumer price inflation, with a high reading seen as bullish for the Pound Sterling (GBP). An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BoE.