Pound Sterling fell further after the UK ONS announced weaker than expected labour market Statistics.

The Pound Sterling (GBP) fell in Tuesday’s London session. After the United Kingdom Office for National Statistics (ONS) announced that labor market Conditions had markedly cooled in the three months ending February. The Unemployment rate rose sharply to 4.2%, as 156K individuals were laid off across the labor market.

Employers laid off workers in February, Demonstrating the detrimental effects of rising UK interest rates.

The labor market data reveals Uncertainty about the economic outlook. Which may lead Bank of England (BoE) Policymakers to start Interest rates are being reduced earlier than planned. When labor market conditions cool, job seekers and present employees Compromise on salary increases. Resulting in slower wage growth that permits high inflation to return to its desired aim on a Sustainable basis.

More volatility is expected in the pound sterling as the UK ONS publishes consumer. And producer inflation figures for March on Wednesday. The headline Consumer Price Index (CPI) is expected to grow 3.1%. Slowing from the previous figure of 3.4%. The core CPI, which excludes volatile food and energy costs, is expected to grow 4.1%, slowing from 4.5% in February. An predicted decrease in the inflation figures would enhance anticipation that the BoE may begin to reduce interest rates from the August meeting.

Daily Market movers: Pound Sterling falls further under several headwinds.

The pound sterling falls to 1.2410 after the UK ONS announced dismal labor market statistics. The ILO Unemployment Rate for the three months ending in February increased substantially to 4.2%, exceeding predictions of 4.0% and the previous reading of 4.0% (updated from 3.9%). Employers dismissed 156K workers in February, up from the previous number of 89K, which was revised upward from 21K.
In March, Claimant Count Change, which measures the change in the number of people claiming unemployment benefits, was lower at 10.9K compared to forecasts of 17.2K and a preceding reading of 4.1K (up from 16.8K).
In the three months ending February, Average Earnings including bonuses climbed consistently by 5.6%, surpassing The consensus is 5.5%. Average Earnings without incentives slowed to 6.0% during the same period, down from 6.1% previously.
Weak labor demand plainly demonstrates the repercussions of the Bank of England’s decision to keep interest rates high. Rising unemployment and low labor demand indicate a weak economic outlook, potentially forcing the BoE to decrease interest rates sooner than planned.

Fears of an increase in Middle Eastern tensions continue to weigh on market sentiment.

The market remains risk-averse, citing fears of further escalation in Middle Eastern tensions and growing uncertainty about when the Federal Reserve will begin lowering interest rates. Eventually, robust demand for safe-haven assets drove the US Dollar Index (DXY) to 106.30.
The Israeli military warned it would reply to Iran’s strike on their land, which occurred on April 13 in
The latter launched hundreds of missiles and drones. This has heightened fears that war would spread beyond Gaza into the Middle East area.
The United States’ impressive retail sales numbers, combined with strong labor demand and stronger consumer price inflation in March, have strengthened the case that Fed officials may postpone rate decreases later this year.
Mary Daly, President of the San Francisco Federal Reserve Bank, stated on Friday that there is no need to begin lowering interest rates. Daly noted that there is still work to be done to ensure that inflation returns to the anticipated 2% pace. She underlined the importance of maintaining low interest rates for an extended period of time.