The British pound declined in European trading on Tuesday against a basket of global currencies, retreating from its two-week high against the US dollar and heading for its first loss in five sessions, as profit-taking and corrective moves weighed on the market.

The currency also came under pressure after gloomy UK labor-market data showed a slowdown in economic activity, reinforcing expectations that the Bank of England may cut interest rates in December.

Price Overview

GBP/USD fell 0.4% to 1.3120 from an opening level of 1.3174, after touching an intraday high of 1.3178.

On Monday, the pound gained around 0.1% against the dollar, marking a fourth consecutive daily rise and hitting a two-week high at 1.3191.

UK Labor Market

Data from the Office for National Statistics showed jobless claims in Britain rose by 29,000 in October the highest increase since July 2024 and well above market forecasts of 17,600, following a 25,800 rise in the previous month.

The unemployment rate climbed to 5% in September, the highest since April 2021, compared with expectations of 4.9% and a prior reading of 4.8%. Wage growth slowed to 4.8% in September from 5.0% in August, falling short of expectations for a 5.0% increase.

These figures highlight the clear weakness in the UK labor market, easing pressure on Bank of England policymakers and strengthening the case for a rate cut in December.

UK Interest Rates

Following the data, market pricing for a 25-basis-point rate cut by the Bank of England in December rose from 60% to 80%.

Investors are now awaiting further key data releases on growth and inflation in the UK to reassess those expectations.