The Pound Sterling saw a steep decline against major currencies, following reports of a deteriorating UK labour market for the period ending September. The Office for National Statistics revealed a net loss of 22K jobs, a stark contrast to the 91K gain previously recorded by August, marking the first drop in employment numbers since March 2024.
Unemployment Rate Shift
The UK’s ILO Unemployment Rate jumped to 5%, compared to previous estimates of 4.9% and a prior reading of 4.8%, reaching its highest point since March 2021. These developments are leading to expectations of the Bank of England considering an interest rate cut in its December meeting.
Average Hourly Earnings, excluding bonuses, showed a 4.6% increase annually, aligning with expectations, yet slightly lower than the 4.7% from August. Earnings including bonuses grew 4.8%, which was slower than anticipated.
The Pound dropped to near 1.3120 against the US Dollar, abandoning a four-day winning streak, influenced by weaker UK employment data. Meanwhile, the US Dollar remained steady, with the Senate moving a government funding bill forward.
The Fed’s interest rate decisions remain under scrutiny, with a 62.4% probability of a December rate cut indicated. Upcoming UK GDP data for the third quarter, anticipated to grow 0.2%, will likely influence the GBP/USD trading pair dynamics.
Based on the sharp fall in the Pound Sterling today, November 11, 2025, we should anticipate further weakness in the coming weeks. The latest labour market data is a clear signal that the UK economy is slowing, with job losses recorded for the first time since March 2024. This deterioration strengthens the case for a Bank of England interest rate cut next month.
Monetary Policy Outlook
The rising unemployment rate, now at a four-year high of 5.0%, is particularly concerning and adds significant weight to the argument for monetary easing. We’ve also seen recent data, such as last week’s October retail sales figures which showed a 0.5% contraction, that confirms consumer activity is fading. Slower wage growth further reduces inflationary pressure, giving the BoE more justification to lower borrowing costs.
The Bank of England’s recent change in guidance, dropping the word “careful” from its policy statement, was a strong dovish signal that we must not ignore. This is a major policy pivot when we recall the aggressive rate-hiking cycle that dominated 2023 and early 2024 to combat post-pandemic inflation. We should now position for the start of a new easing cycle, using derivatives like buying GBP put options to profit from a potential decline.
Looking ahead, this Thursday’s UK GDP data is the next major catalyst and is expected to confirm slower economic growth. With the GBP/USD pair already trading below its 200-day moving average, the technical trend is bearish, pointing towards a possible test of the April lows near 1.2700. Selling GBP/USD futures or establishing bearish option spreads are viable strategies in this environment.
While the US Fed is also considering a rate cut, the economic data from the UK is deteriorating more rapidly. The recent US inflation report showed core prices holding steadier than in the UK, suggesting the Fed may be more patient than the BoE. This divergence in economic momentum makes a short position on the Pound against the US Dollar particularly attractive.
