Sterling holds steady ahead of crucial labour market data

Sterling held above $1.30 ahead of UK labor market data on Tuesday that, if disappointing, will provide a further signal that the Bank of England could cut interest rates next week. The pound has fallen in the past fortnight as investors hiked bets on a rate reduction by policymakers keen to boost an economy struggling to grow in recent quarters.

According to a Reuters poll of economists, average weekly earnings growth year-on-year for November is expected to come in at 3.4%, down slightly on the previous month. Employment is seen rising by 110,000 for the same month. The data is due at 0930 GMT.

Money markets now price in a two-thirds chance of a BoE rate cut to 0.5% from 0.75% when policymakers meet next week. "If there's a bias in the UK rates market, it's for the pricing of a January cut to become a little less certain, while confidence increases that we will have seen one within a few months," said Kit Juckes, an analyst at Societe Generale.

"Sterling remains vulnerable in the short term, given positioning," he added, referring to the net long position speculators have built up in the pound this year." The pound was flat in early London trading, at $1.3017. On Monday it had fallen to as low as $1.2962 after UK finance minister Sajid Javid said at the weekend that Britain would not commit to sticking to European Union rules in post-Brexit trade talks.

Against the euro, sterling nudged up to 85.21 pence.

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