Pound Rises After U.K. Labor Data

The British pound strengthened against most major currencies in the European session on Tuesday, after data showed that the nation's unemployment rate fell slightly in three months to August, while it was forecast to remain unchanged.

Data from the Office for National Statistics showed that the U.K. unemployment rate fell slightly to 4.0 percent in three months to August, while it was forecast to remain unchanged at 4.1 percent.

Payroll employment decreased 15,000 from the prior month to 30.3 million in September.

U.K. wage growth softened to the lowest in more than two years in the three months to August, adding support to expectations that the central bank will cut interest rates further at the next meeting.

In the three months to August, average earnings excluding bonus increased 4.9 percent from the previous year, slower than the 5.1 percent increase in the three months to July.

This was the slowest rise since June 2022 and also matched expectations.

European stocks traded higher amid investor optimism about corporate earnings.

After beats by JP Morgan and Wells Fargo, the focus now shifts to earnings from Bank of America, Citigroup, Goldman Sachs, Johnson & Johnson, UnitedHealth and Walgreens later in the day.

Thursday's ECB meeting also remains on investors' radar, with the central bank likely to deliver another interest rate cut after recent data signaled continued weakness in the euro zone economy.

In the European trading today, the pound rose to nearly a 2-week high of 0.8336 against the euro and a 5-day high of 1.3087 against the U.S. dollar, from early lows of 0.8352 and 1.3035, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.81 against the euro and 1.34 against the greenback.

Against the Swiss franc, the pound edged up to 1.1276 from an early low of 1.1248. The pound may test resistance around the 1.13 region.

Meanwhile, the pound dropped to 194.67 against the yen, from an early high of 195.68. The next possible downside support for the pound is seen around the 192.00 region.

Looking ahead, Canada CPI data for September, U.S. NY Empire State manufacturing index for October, U.S. Redbook report and U.S. consumer inflation expectations for September are set to be released in the New York session.