GBP/USD Muted as UK Wages Cool to 4.3%, Unemployment Holds at 4.9%

GBP/USD showed limited reaction following the release of UK labour market data for May, which painted a mixed picture for the Bank of England's policy outlook. The ILO unemployment rate held steady at 4.9%, beating the 5.0% consensus, while employment change surged to 147k versus the 80k expected, suggesting underlying resilience in the jobs market. However, average weekly earnings growth slowed to 4.3% year-over-year from 4.4%, slightly below the 4.5% forecast, providing the BoE with welcome evidence that wage-driven inflationary pressures are easing. Excluding bonuses, earnings growth held flat at 3.4%. June payrolls declined by 4k, a modest deterioration from the prior revised reading of +3k. The ONS cautioned that data quality issues persist with the Labour Force Survey due to the delayed transition, warranting caution in interpretation. For traders, the softer wage component marginally increases the probability of BoE rate action but is insufficient alone to shift expectations materially. Near-term GBP direction will likely be driven by upcoming inflation data and broader risk sentiment.