Sterling fell in European trade on Thursday against major rivals, giving up four-month high against the dollar and on track for the first loss in four days on profit-taking following weak UK labor data.

The decline comes amid risk aversion before the Bank of England's policy decision today, expected to maintain interest rates unchanged.

The Price

The GBP/USD pair fell 0.3% today to $1.2963, with November 2024 highs at $1.3015.

The pound rose 0.1% on Wednesday against the greenback, marking the third profit in a row as US yields declined.

UK Labor Data

UK unemployment for three months ending January steadied at 4.4% as expected, same as the previous reading.

UK average wages for the three months ending January rose 5.8% as expected, below 6.1% in the previous reading.

The data showcases softness in the labor market, which bolsters the odds of a May interest rate cut by the Bank of England.

UK Rates

Following the data, the odds of a BOE interest rate cut in March stood at just 1%, with a higher than 50% chance of a rate cut in May.

BOE

Later today, the Bank of Japan is expected to announce its policy decision, likely to maintain interest rates flat at 4.5%, the lowest since May 2023.

BOE Governor Andrew Bailey will speak later on the future of inflation and interest rates and the UK economic outlook.

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