2024.01.1607:20:00UTC+00Pound Falls On Soft U.K. Wage Growth Data

The British pound weakened against other major currencies in the European session on Tuesday, after data showed that that the U.K. average earnings grew less-than-expected for three months ending November.

Speculations rose on early rate cuts from the Bank of England (BOE) on behalf of soft U.K. Wage Growth data.

Data from the Office for National Statistics showed that the U.K. average earnings including bonuses increased 6.5 percent in three months to November, which was weaker than economists' forecast of 6.8 percent. Excluding bonuses, earnings grew 6.6 percent, matching expectations.

The number of vacancies declined 49,000 to 934,000 in October to December. Vacancies decreased for the 18th consecutive period.

Data showed that there were 69,000 working days lost in November because of labor disputes across the UK. However, this was the lowest number of working days lost since May 2022, the ONS said.

Meanwhile, the jobless rate came in at 4.2 percent in three months to November, the same rate as seen in three months to October.

The European stock markets traded lower, as investors temper rate cut expectations on the first monetary policy decisions of the year from major global central banks.

The British sterling showed mixed trading in the Asian session today. While the pound fell against the U.S. dollar, it held steady against the euro, the yen and the Swiss franc.

In the European session now, the pound fell to a 6-day low of 0.8620 against the euro and nearly a 2-week low of 1.2662 against the U.S. dollar, from early highs of 0.8603 and 1.2717, respectively. If the pound extends its downtrend, it is likely to find support around 0.87 against the euro and 1.24 against the greenback.

Against the Swiss franc and the yen, the pound edged down to 1.0882 and 185.00 from early highs of 1.0899 and 185.51, respectively. The pound may test support near 1.07 against the franc and 180.00 against the yen.

Looking ahead, Germany's ZEW economic confidence survey data for January is slated for release in the European session.

In the New York session, Canada housing starts for December, inflation data for December and U.S. NY Empire State manufacturing index for January are set to be published.

Traders now look to Federal Reserve Governor Christopher Waller's speech at 11:00 am ET, whose dovish turn in late November helped to send markets soaring.