Pound Falls As U.K. Weak Jobs Data Spurs BoE Rate Cut Bets

(RTTNews) - The British pound weakened against other major currencies in the European session on Tuesday, as weak labor market data reinforced expectations that the Bank of England may cut interest rates as soon as March.

Market bets that the Bank of England (BoE) will lower interest rates by 25 basis points (bps) in March.

Data from the Office for National Statistics showed that the unemployment rate rose to 5.2 percent in the three months to December from 5.1 percent in the preceding period. The rate came in line with expectations.

Annual growth in employees' average earnings including bonus was 4.2 percent but weaker than the forecast of 4.6 percent. Earnings excluding bonus also grew 4.2 percent, which was in line with expectations.

In January, payroll employees decreased 11,000 from the previous month to 30.3 million. Data showed that the number of vacancies registered a small increase of 2,000 to 726,000 in the November to January period.

In the European trading today, the pound fell to an 8-day low of 0.8731 against the euro and nearly a 2-week low of 1.3552 against the U.S. dollar, from early highs of 0.8695 and 1.3630, respectively. If the pound extends its downtrend, it is likely to find support around 0.88 against the euro and 1.34 against the greenback.

Against the yen and the Swiss franc, the pound dropped to a 2-month low of 207.35 and a 1-week low of 1.0441 from early highs of 209.30 and 1.0490, respectively. The pound may test support near 204.00 against the yen and 1.03 against the franc.

In the New York session, U.S. ADP weekly employment data, Canada CPI data for January, Canada wholesale sales data for December, U.S. New York Empire state manufacturing index for February and U.S. NAHB housing market index for February are slated for release in the New York session.