[author: Katie Keith]

The pound ticked lower on Thursday as the UK’s latest jobs report revived the potential of a Bank of England (BoE) interest rate cut next month.

Sterling remains on the back foot so far this morning, with GBP/EUR subdued at €1.1876 and GBP/USD retreating to $1.2928. GBP/CAD is muted at CA$1.7729, while GBP/AUD holds steady at AU$1.9298 and GBP/NZD dips to NZ$2.1433.

Looking ahead, will a larger-than-expected contraction in UK retail sales last month apply additional pressure to the pound today?

What’s been happening?

The pound retreated from its recent multi-month highs during yesterday’s session as markets digested the UK’s latest employment data.

In addition to showing that unemployment held at a near-three-year high at 4.4%, May’s jobs report also showed that wage growth in the UK cooled, slowing to its lowest levels since August 2022.

This saw Sterling relinquish some of Wednesday’s post-inflation gains as some analysts suggested this could place an August interest rate cut from the Bank of England back on the table.

The euro, meanwhile, was infused with some volatility on Thursday as the European Central Bank (ECB) delivered its latest interest rate decision with some mixed forward guidance.

Speaking at her press conference following the bank’s decision to keep rates on hold, ECB President Christine Lagarde claimed the bank is not on a ‘predetermined rate path’ and that September’s decision is ‘wide open’.

At the same time, the US dollar trended broadly higher yesterday as the currency rose in tandem with US Treasury yields.

Tempering these gains, however, were the latest US jobless claims, which reported a larger-than-expected increase in new unemployment claims last week.

What’s coming up?

Turning to today, the session opened with the publication of the UK’s latest retail sales figures.

This has seen the pound come under some pressure this morning, following a larger-than-expected contraction in sales growth last month.

Meanwhile, USD investors will look to speeches by Federal Reserve officials John Williams and Raphael Bostic for fresh impetus today.

Could the policymakers seek to temper expectations for a September rate cut and help the US dollar to close the week on a high note?

Finally, in the absence of any notable Eurozone economic data, the euro may struggle to find momentum during today’s session.