Pound Weakens as Labour Data Misses Estimates

The British Pound has weakened against the US Dollar following disappointing UK labour data. The GBP/USD pair lost ground to around 1.3535 during early Asian trading hours on Wednesday, with traders bracing for the release of UK Consumer Price Index (CPI) inflation data later in the day.

Data released by the Office for National Statistics showed that the UK Unemployment Rate held steady at 4.9% in June, missing market consensus estimates. Average Earnings Including Bonus fell to 4.1%, down from 4.4% in May.

Economists suggested that the pay slowdown could deter the Bank of England from raising interest rates this year. According to ING's James Smith, ongoing weakness in private sector hiring and wage growth suggests 'the bar is still relatively high for a rate hike in 2026, barring a severe and prolonged spike in energy prices.'

Traders expect a 35% chance of a US interest rate hike at the Federal Reserve's September meeting, down from 47% a month earlier. This easing of expectations could weigh on the Greenback and cap the downside for the GBP/USD pair.