Pound Sterling wobbles against US Dollar ahead of UK employment data

The Pound Sterling consolidates around 1.3645 against the US Dollar amid holiday in the US.
Investors await the UK employment and the inflation data, releasing on Tuesday and Wednesday, respectively.
Fed’s Bowman is scheduled to speak during North American trading hours on Monday.

Sagar Dua FXStreet

The Pound Sterling (GBP) trades calm near 1.3645 against the US Dollar (USD) during the European trading session on Monday. The GBP/USD pair consolidates as investors shift focus to the United Kingdom (UK) labor market data for three months ending December.

Economists expect UK ILO Unemployment Rate to have remained steady at 5.1%, the highest level seen since January 2024. Average Earnings Excluding Bonuses, a key measure of wage growth, is expected to have risen at an annualized basis of 4.2%, slower than the prior reading of 4.5%.

Signs of slowing wage growth and weak employment demand would prompt expectations of interest rate cuts by the Bank of England (BoE) in the near term, at times when policymakers are confident that price pressures would return to the 2% target in the second quarter this year.

For more cues on the current state of the UK inflation, investors will focus on the Consumer Price Index (CPI) data for January, which will be released on Wednesday. The UK headline inflation is seen lower at 3% Year-on-Year (YoY) from 3.4% in December.

Also, the US Dollar (USD) trades stably amid an extended weekend in the United States (US) due to holiday on Monday. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally higher to near 97.00.

In Monday’s session, investors will focus on the speech from Federal Reserve (Fed) Governor Michelle Bowman for fresh cues on the US interest rate outlook.

Economic Indicator

Average Earnings Excluding Bonus (3Mo/Yr)

The Average Earnings Excluding Bonus release is a key short-term indicator of how levels of pay are changing within the UK economy; it is released by the UK Office of National Statistics. It can be seen as a measure of growth in "basic pay". Generally, a positive result is seen as bullish for the Pound Sterling (GBP), whereas a low reading is seen as bearish.

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