Sterling Suffers Modest Decline as UK Labour Market Data Disappoints

UK labour market data released on Tuesday showed a weaker-than-expected employment growth, which deepened the case against further interest rate hikes by the Bank of England. Sterling traded at $1.3526 against the dollar at 09:06 BST, down 0.18% from Monday's close.

The Office for National Statistics reported that unemployment held steady at 4.9%, but employment increased by only 83,000 during the second quarter, missing forecasts of a 129,000 gain. This represented a 35.7% miss and marked a clear slowdown in hiring momentum.

Job vacancies fell to 707,000 in the three months to July, their lowest level since 2021, and payrolled employment declined by an estimated 13,000 in July, marking the sixth consecutive monthly fall.

The private-sector regular earnings growth slowed to 2.8% year-over-year, the weakest rate since late 2020, which is a major concern for the Bank of England as it considers further tightening measures.