Sterling is falling as investors look for British jobs, according to inflation reports this week

By Medha Singh

LONDON (Reuters) – The pound remained near a one-month low against the dollar on Monday, ahead of the release of wage growth and inflation data this week that could influence the Bank of England’s next move at its monetary policy review meeting next month .

Sterling was little changed at $1.30660, near last week’s one-month low of $1.30110, and was unchanged against the euro at 83.70 pence.

The pound is about 2.8% below its two-and-a-half-year high hit at the end of September as markets scaled back bets on a huge interest rate cut by the US Federal Reserve.

Expectations that persistent inflation would keep the BoE on a gradual rate-cutting path relative to its peers – the Federal Reserve and the European Central Bank – had supported the pound’s outperformance this year.

Money markets currently see an 85 percent chance of a 25 basis point rate cut from the BoE’s November policy meeting and are evenly split on a further cut by year-end. [IRPR]

Meanwhile, Prime Minister Keir Starmer is hosting some of the world’s biggest companies for a conference on Monday where he will promise to scrap regulation that is holding back growth and investment.

The investment summit, which the government hopes to attract tens of billions of dollars in investment, is unlikely to have a major impact on the pound, ING market head Chris Turner said in a note.

Instead, Tuesday’s U.K. wage growth data and Wednesday’s consumer price report “could have a good say in pricing the Bank of England and sterling’s easing cycle,” Turner said.

If the UK services CPI falls back in September as consensus expects, EUR/GBP could hold support at 0.8350 this week and retest the recent high at 0.8435, while GBP/USD could break the 1, could push 3,000, Turner said.

Investors were also nervous ahead of Labour’s first budget, with Finance Minister Rachel Reeves likely to announce tax rises to help plug the government’s budget deficits.

A Deloitte survey found that optimism among major British companies waned ahead of the publication of the annual budget. This is in line with most other measures of business and consumer confidence, which point to a decline in sentiment before October 30.

The ECB interest rate decision and the US retail sales report, both due on Thursday, are key events that could impact broader markets this week.

(Reporting by Medha Singh; Editing by Jan Harvey)