# Sterling holds firm after UK jobs data muddies rate outlook Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-12-13 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: GBP Steady Despite UK Employment Data as Investors Await US Meta Description: Stay informed on the latest updates regarding the pound's performance following UK employment data and its implications ahead of the key U.S. consumer URL: https://financedigest.com/sterling-holds-firm-after-uk-jobs-data-muddies-rate-outlookhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-12-13t113150z1lynxmpeibc0hfrtroptp4britain-banks-payment-1736814725459-compressed.jpg) By Amanda Cooper LONDON (Reuters) – The pound held broadly steady on Tuesday, as gains following UK employment data were offset by caution ahead of a key reading of U.S. [consumer inflation](https://www.financedigest.com/u-s-consumers-inflation-expectations-highest-in-8-years-ny-fed-says.html "U.S. consumers’ inflation expectations highest in 8 years, NY Fed says"). Britain’s jobless rate rose for a second month and there were other signs in [data on Tuesday that some of the inflationary heat in the labour market is cooling as the economy](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") stumbles, including a rise in older people looking for work. But the Bank of England (BoE) – which looks set to raise interest [rates for the ninth consecutive meeting on Thursday – was likely to note the strongest increase in basic pay](https://www.financedigest.com/beat-the-exchange-rate-and-buy-that-dream-holiday-home-by-paying-in-pounds.html "Beat the exchange rate and buy that dream holiday home – by paying in pounds! ") on record, not including the period around the COVID-19 pandemic. This adds to thoughts of a full employment recession and supports some of the more hawkish pricing of the Bank of England (BoE) policy cycle,” ING strategist Chris Turner said, adding that this might not be enough to prompt the central bank to [raise rates by more than half a percentage point](https://www.financedigest.com/how-to-raise-my-credit-score-40-points-fast.html "How to raise my credit score 40 points fast"), but could give the pound a lift. Today’s UK [data could light the fuse of a Cable rally](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data"), were US CPI data to oblige. Our prior has been that this rally stalls around this $1.2300/2310 area – but a close above here [warns of another three to four big figures higher](https://www.financedigest.com/powells-warning-on-higher-u-s-rates-pushes-dollar-to-3-mth-high.html "Powell’s warning on higher U.S. rates pushes dollar to 3-mth high") during thin, year-end markets,” Turner said. The [pound was last up 0.1% against the dollar](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise") at $1.22850, and up 0.1% against the euro, which traded around 85.79 pence. Money markets show investors are not fully convinced the [BoE will only raise rates](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up") by half a percentage point when the Monetary Policy Committee meets on Thursday. Futures point to a 60% chance of a half-point hike to 3.50%, but a 40% chance of a 75 [basis point](https://www.financedigest.com/traders-ramp-up-bets-on-75-basis-point-ecb-sept-hike-bond-yields-jump.html "Traders ramp up bets on 75 basis-point ECB Sept hike, bond yields jump") increase. In September, when the pound [crashed to a record low in the wake of former finance](https://www.financedigest.com/g20-watchdog-homes-in-on-decentralised-finance-after-ftx-crash.html "G20 watchdog homes in on decentralised finance after FTX crash") minister Kwasi Kwarteng’s fiscal plan, rate expectations blew out along with bond yields, leading investors to price in a peak rate of 6.31% by July 2023. Since then, those expectations have cooled off and markets point to UK [rates peaking](https://www.financedigest.com/bank-of-england-set-to-hike-to-4-as-rate-peak-looms.html "Bank of England set to hike to 4% as rate peak looms") at around 4.68% by August, where they are expected to hold until around December 2023, when the first rate cuts are priced in. Coming up first though is U.S. monthly consumer inflation, which is due to be released later on Tuesday and is forecast to show [price pressures](https://www.financedigest.com/heavy-norwegian-gas-maintenance-adds-to-energy-price-pressure.html "Heavy Norwegian gas maintenance adds to energy price pressure") moderated for a fifth month in November. The question for [investors is whether or not that will be enough to temper expectations](https://www.financedigest.com/analysis-china-property-financing-tweaks-fall-short-of-investor-expectations.html "Analysis-China property financing tweaks fall short of investor expectations") for U.S. interest [rates to peak](https://www.financedigest.com/morgan-stanley-others-now-forecast-4-peak-for-key-ecb-rate.html "Morgan Stanley, others now forecast 4% peak for key ECB rate") around 5% by May or June. (Editing by Crispian Balmer) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---