Sterling Rises as UK Labor Market Data Strengthens Bank of England Rate Hike Expectations
Discover why the British pound rose against the dollar and euro as strong UK labor market data reinforces expectations for a November Bank of England rate hike.
POLICY WIRE — London, United Kingdom — The British pound advanced on Tuesday following the release of employment figures that signaled a stabilizing labor market. The encouraging data heavily reinforced expectations that the Bank of England will pursue an interest rate hike during its upcoming policy meeting next month.
Sterling climbed 0.3% against the US dollar to reach $1.3343. The currency posted an identical 0.3% gain against the euro, moving to 84.04 pence and touching its strongest level against the single currency since May 2025.
Underpinning the currency’s strength were key employment indicators showing an increase in payrolled employees, a decrease in unemployment, and a faster-than-expected rise in wage growth. On-chain analysis indicates that money markets have almost fully priced in a 25-basis-point rate hike scheduled for November 5.
Traders are currently projecting up to four additional rate hikes through mid-2027. Meanwhile, the broader economic backdrop includes the IMF upgrading the UK 2026 growth forecast to 1%, alongside Brent crude rising 5% this week to $76 per barrel.
Reporting by Policy-Wire (PW)
