The Pound Sterling (GBP) is up 0.3% vs. the US Dollar (USD) and relative underperformer among the G10 currencies, lagging all but the AUD and JPY, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

BoE cut expectations fade further

"Tuesday’s labor market data were mixed, offering wage growth figures that were largely in line with expectations while also showing a stronger than expected rise in total employment and a deeper than expected contraction in monthly change of payrolled employees. The release is important, kicking off a heavy data week that includes CPI on Wednesday, public finance figures on Thursday, and retail sales and preliminary PMI’s on Friday."

"Short-term rates markets are showing signs of a material rise in rate expectations, fading the extent of cuts expected in 2026. Markets are now pricing roughly 40bpts of BoE easing, down from 50bpts over the past week or so. As with EUR, sentiment appears to be dominating as we note the GBP’s high correlation to risk reversals."