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GBP/CAD steadies near 6-week low after record UK wage growth

The British Pound steadied against the Canadian Dollar on Tuesday, paring earlier gains in the session, after data showed UK wages had risen at a record rate once again in July, mounting pressure on the Bank of England to continue its policy tightening cycle.

Regular pay excluding bonuses in the United Kingdom surged 7.8% year-on-year to GBP 617 per week during the three months to July, while matching the rate in the prior period. It has also been the sharpest annual growth rate on record.

Regular pay excluding bonuses in finance and business services rose the most, 9.5% YoY in July, while pay in the manufacturing sector increased 8.1% YoY.

Meanwhile, the rate of unemployment in the UK surged to 4.3% in the three months to July, marking the highest level since Q3 of 2021. This suggested labor market might be cooling following BoE’s aggressive monetary policy tightening.

The number of unemployed persons rose by 159,000 to 1.46 million between May and July, mostly due to individuals unemployed for up to 12 months.

And, employment levels dropped more than expected, by 207,000 to 32.88 million, between May and July, mostly driven by full-time self-employed workers. This marked the largest drop in job creation since September 2020.

The pair advanced to an intraday high of 1.7020 immediately after the data release, but later moved back below the 1.7000 level.

As of 7:15 GMT on Tuesday GBP/CAD was inching down 0.01% on the day to trade at 1.6977. Earlier in the session, the minor Forex pair went down as low as 1.6971. The latter has been the pair’s weakest level since August 4th (1.6956).

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