British Pound: Labour data seen backing BoE hold – TD Securities

TD Securities expects the UK labour market to remain soft but stable in June, with employment rising 100k on a three‑month basis and unemployment edging down to 4.7%. Headline average weekly earnings are forecast to slow to 4.0%, while ex‑bonus pay holds at 3.4%. TD argues these wage dynamics should reassure the Bank of England and support keeping Bank Rate unchanged.

Wage slowdown aligns with inflation target

"We expect the labour market to continue along the steady but lacklustre path seen since the start of the year, with June delivering 100k change in employment on a 3m/3m basis (mkt: 120k; prior: 148k)."

"The unemployment rate is likely to come down slightly as a result, but remain elevated at 4.7% (mkt: 4.8%; prior: 4.9%)."

"Elsewhere, we could see a fair drop in the headline average weekly earnings growth measure to 4.0% 3m/y (mkt: 4.0%) from 4.3% in May, as March's outsized bonus figures fall out of scope and reverse the upward pressures seen in the past three months."

"Ex-bonus wage growth should remain at 3.4% 3m/y (mkt: 3.4%) while private earnings ex-bonus growth is set to dip to 2.7% 3m/y (mkt: 2.8%; prior: 2.9%)."

"The latter two measures sit within reach of levels consistent with the BoE's inflation target, likely reassuring the majority of the MPC that labour market dynamics are limiting second-round inflation pressures and supporting a majority vote to keep Bank Rate on hold."