MENA Newswire News Desk: The British pound gained modestly against the dollar and euro today, reflecting optimism after recent UK labor market data indicated economic stability. The employment data revealed a notable rise in job numbers and a decrease in pay growth to a two-year low, suggesting sustained economic health which may lead the Bank of England to consider an interest rate cut later this year.
As inflation nears the Monetary Policy Committee’s target of 2%, economic resilience continues to be observed, hinting at a potential gradual easing of monetary policy. Market participants are now keenly awaiting the upcoming GDP figures due Wednesday, ahead of the Bank of England’s meeting later this month.
According to Sanjay Raja, a senior economist at Deutsche Bank, the UK economy is expected to grow by 0.3% month-on-month, rebounding from a stagnant June, bolstered by improvements in the retail and leisure sectors. This follows sterling’s rise to $1.3085, briefly touching $1.3107 earlier.
Conversely, the dollar saw a slight decline in anticipation of U.S. inflation data and the upcoming televised presidential debate, both of which could influence future rate decisions. Enrique Diaz-Alvarez, chief economist at Ebury, highlighted the resilient labor market and easing inflation as factors supporting a slow pace in the forthcoming rate cuts by the Bank of England.
The euro experienced a marginal drop against sterling, with trading down 0.05% at 84.36 pence per euro. Kit Juckes, a macro strategist at SG Markets, noted that any positive surprises in the UK economic data could push the euro below 0.84 against the pound. In the coming weeks, attention will also turn to the new Labour government’s inaugural fiscal policy announcement scheduled for October 30, amid speculation of possible tax increases targeting the banking sector to bolster public finances.