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Macro EconomyMedium•17 February 2026•

1 min read

UK Wage Growth Slows to 4.2%, Boosting Bank of England Rate Cut Expectations

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Regular pay growth in the United Kingdom slowed to 4.2% during the final three months of 2025, according to the latest data from the Office for National Statistics (ONS). This deceleration indicates a cooling labor market and a significant reduction in wage-driven inflationary pressures. The ONS report highlights a weakening momentum across the UK economy as it transitioned into the new year. Consequently, financial markets have increased their bets on the Bank of England (BoE) initiating interest rate cuts sooner than previously anticipated. While the slowdown weighs on the British Pound (GBP), it has provided a supportive backdrop for UK equities and government bonds. Investors are now closely monitoring upcoming inflation figures to gauge the BoE's next policy move.