Sterling rises 0.30% against dollar after UK data show improved employment
Key Facts
Sterling rose 0.30% to $1.3346 at 07:31 GMT in the session when British labour market data were released, according to Investing.com, while Reuters confirmed the currency's gains following the announcement. The unemployment rate stood at 4.7% in June to August 2026, according to Britain's Office for National Statistics. The employment rate rose to 75.3% over the same period. The rate increased by 0.2 percentage points compared with both the previous quarter and the same period last year. The economic inactivity rate stood at 20.9%, alongside an improving employment rate, falling vacancies and slowing wage growth.
Preliminary estimates from the ONS and HM Revenue and Customs showed the number of payrolled employees increased by 13,000 in September 2026 compared with August. Meanwhile, vacancies stood at 691,000 in July to September, according to the ONS. Vacancies fell by 21,000 compared with April to June, despite the increase in payrolled employees. The ONS noted that small businesses were hesitant to hire as labour costs rose. It attributed that reluctance to "higher labour costs", as improving employment coincided with a decline in vacancies.
On wages, annual growth in average weekly earnings including bonuses slowed to 3.7% in June–August, from 3.9% in May–July, according to the ONS. Public-sector regular pay grew 6.3% year on year over the same period. In the private sector, regular pay growth stood at 3.0%, below the public-sector pace. After adjusting for inflation using the consumer prices measure including owner occupiers' housing costs, real regular pay rose 0.6% year on year. Real total pay growth, including bonuses, stood at 0.7%, according to the ONS bulletin on average weekly earnings.
The developments follow the Bank of England's decision to hold interest rates at 3.75% at its September 2026 meeting. The decision passed by a 6–3 majority, according to minutes of the Monetary Policy Committee meeting published on the bank's website. Members who opposed holding rates preferred an increase, according to the minutes. They favoured a rise of 0.25 percentage points, which would have taken the rate to 4%. On prices, British consumer price inflation stood at 3.1% in August 2026, according to correspondence between the Treasury and the Bank of England published in September.
In the broader currency market, Investing.com's coverage on the day of the employment data release reported that the dollar fell against commodity-linked currencies. It rose against the Japanese yen and Swiss franc in the same session, however. An earlier report by the website, citing an ING analyst, had pointed to a 25-basis-point decline in the U.S. two-year interest rate swap rate. That decline spanned the period from the release of U.S. consumer price inflation data on October 14 to before the British jobs data announcement. The move came amid concerns surrounding artificial intelligence stocks, according to the report published before the labour market data.
The ONS will release Britain's consumer price inflation report for September 2026 on October 21, 2026, according to the officially announced schedule. The ONS set the release time at 7:00 a.m. On the same day, Bank of England Governor Andrew Bailey's schedule includes a discussion in London on "Central bank independence in an age of financial instability", according to the bank's events calendar. The Bank of England will announce its next interest rate decision on November 5, 2026, after holding rates at its previous meeting. The next release of British labour market data is scheduled for November 17, 2026.