• The Pound Sterling outperforms the US Dollar as upbeat UK Employment data weighs on BoE sequential interest-rate cut bets.
• UK’s Unemployment Rate unexpectedly falls to 4.2%, Average Earnings outperform expectations.
• Investors await the UK/US inflation data for July, which is scheduled for Wednesday.

The Pound Sterling (GBP) delivers a sharp upside move against its major peers in Tuesday’s London session. The British currency strengthens as the United Kingdom (UK) Office for National Statistics (ONS) reported upbeat labor market data for the three months ending in June, which has weighed on market expectations of subsequent interest-rate cuts by the Bank of England (BoE).

The agency reported that the ILO Unemployment Rate unexpectedly declined to 4.2%. Economists expected the jobless rate to have increased to 4.5% from the prior release of 4.4%.

Apart from improving the job market, the slower-than-expected decline in Average Earnings Excluding Bonuses has also dampened expectations of BoE subsequent rate cuts. Average Earnings, a wage growth measure that drives inflation in the service sector, rose at a faster-than-expected pace of 5.4% from the estimates of 4.6% but was slower than the former reading of 5.7%.

Going forward, more volatility is anticipated in the Pound Sterling as July's UK Consumer Price Index (CPI) data is lined up for release on Wednesday. The CPI report is expected to show that core inflation, which strips off volatile food and energy prices, decelerated to 3.4% from the prior release of 3.5%.