GBP/USD pressured as UK labour market cools further in June, BoE cut bets rise

Sterling is trading on the back foot after the latest UK labour market report showed further evidence of cooling through June. Softer employment growth, an easing in vacancies and a continued moderation in private sector wage growth reinforce the view that the Bank of England has room to deliver further policy easing, trimming the yield support that has underpinned GBP for much of the year. Slower pay growth is particularly important for the MPC, which has repeatedly flagged wage persistence as the main obstacle to faster rate cuts. Money markets have responded by nudging up the probability of a cut at the next meeting, pulling short-dated gilt yields lower and weighing on GBP/USD and GBP/JPY. Offsetting this, broader dollar weakness tied to Treasury buyback-driven liquidity support is limiting downside for cable. Technically, GBP/USD faces resistance near recent highs, with support from the 200-day moving average area; EUR/GBP is likely to grind higher if the cooling labour trend persists into the next inflation print.