Weak UK employment data has reinforced expectations of Bank of England interest rate cuts, according to Bloomberg. The pound fell 0.7% to $1.3456, marking its steepest decline this month, while UK bond yields dropped 5–6 basis points across the curve, outperforming eurozone counterparts.
Employment saw its sharpest decline in five years, accompanied by slower-than-forecast wage growth. These developments have boosted trader confidence that the central bank will implement two more rate cuts this year, following two reductions that have already brought the benchmark rate to 4.25%.
However, MUFG's Lee Hardman cautioned that market expectations for monetary easing may be overstated. Despite the pressure, the pound sterling remains one of the highest-yielding G10 currencies and recently reached its strongest level since February 2022.