Pound sterling is trading in a tight range as investors await UK employment data for the three months ending September.

The Pound Sterling (GBP) performs middling against its main counterparts on Monday, in a tranquil start to the week as investors keep their powder dry ahead of the United Kingdom’s (UK) labor market statistics for the three months ending September, which issued on Tuesday. The jobs figures could have a substantial impact on market expectations for the Bank of England’s (BoE) monetary policy decision at the December meeting.

The UK unemployment rate predicted to have risen to 4.1%.

The  unemployment rate expected to rise to 4.1% in the three months to September from 4.0% in the quarter ending August. Investors will also pay special attention to Average Earnings, a crucial indicator of wage growth that influences consumer spending. Earnings growth has been a major contributor to high inflation in the services sector, which BoE officials constantly monitor when making interest rate decisions.

The average earnings Excluding bonuses, growth is projected to have been 4.7%, slower than the previous reading of 4.9%. Softer pay growth would raise prospects for more interest rate cuts by the BoE, implying a further decrease in service sector inflation. In contrast, increased wage growth would do the opposite. Average earnings, including bonuses, are expected to have increased to 3.9% from the previous release of 3.8%.

Last Monday, the BoE cut interest rates by 25 basis points (bps) to 4.75%, as expected. BoE Governor Andrew Bailey foreshadowed a more gradual policy easing strategy, emphasizing the bank’s commitment to reducing inflation down to the desired rate of 2%.

Daily Market movers: Pound Sterling loses vs the US dollar.

During London trading hours on Monday, the pound sterling fell to around 1.2900 against the US dollar (USD). The GBP/USD pair falls as the US Dollar maintains Friday’s rally and attempts to retest a four-month high. The US Dollar Index (DXY), which measures the greenback’s value against six major currencies, rises beyond 105.30 The greenback increases on hopes of increased investment and spending in the United States (US), as Republicans appear to seize control of both the Senate and the House of Representatives, allowing the Trump administration to quickly execute fiscal plans.

The predicted shift in government policies, from higher import tariffs to lower taxes, would increase the US fiscal deficit and inflationary pressures, thereby forcing the Federal Reserve (Fed) to adopt a restrictive policy posture. However, Fed Chair Jerome Powell put back expectations for a near-term impact on monetary policy last Thursday, when the central bank decreased interest rates by 25 basis points (bps) to 4.50%-4.75%.

This week, a bevy of Fed officials have queued up for Commentary on Thursday’s interest rate decision and recommendations for monetary policy action at this year’s final meeting in December. In addition to Fed speeches, investors will be looking at the October US Consumer Price Index (CPI) data, which will be release on Wednesday. The CPI report expected to reveal that annual headline inflation increased to 2.6% from 2.4% in September, while core statistics rose steadily by 3.3%.