Free Forex Signals

• The Pound Sterling extends its downside against the US Dollar as investors shift focus to the US inflation.
• UK job growth remained robust in the three months ending in July.
• An expected decline in the UK wage growth would prompt BoE interest rate cut prospects for this month.

The Pound Sterling (GBP) trades higher against its major peers, except the US Dollar (USD) and the Canadian Dollar (CAD), in Tuesday’s New York session after the release of the mixed United Kingdom (UK) Employment report for the three months ending in July. The British currency strengthens as the UK Office for National Statistics (ONS) reported a robust labor demand, while the wage growth eased broadly in line with expectations.

The agency reported that the ILO Unemployment Rate expectedly declined to 4.1% from the prior release of 4.2%. UK employers hired 265K new workers, significantly higher than the former release of 97K. Historically, robust job growth boosts hawkish Bank of England (BoE) bets. Still, it is less likely to be in this scenario as Average Earnings data, a wage growth measure that drives inflation in the service sector, has decelerated expectedly.

BoE policymakers have remained worried about persistent inflation due to high inflation in the services sector. A slowdown in the wage growth momentum would relieve them and boost market speculation for BoE interest rate cuts this month.

Average Earnings Excluding Bonuses came in at 5.1%, as expected, the lowest reading in two years, against the former release of 5.4%. The wage growth data, including bonuses, decelerated faster than expected to 4%, from estimates of 4.1% and the prior reading of 4.6%, upwardly revised from 4.5%.

Going forward, investors will focus on the UK monthly Gross Domestic Product (GDP) and factory data for July, which will be published on Wednesday.