UK Jobs Data Fuels BoE Rate Cut Bets: Probabilities Surge to 81%

UPDATE: The UK labour market report released earlier today has sent shockwaves through financial markets, with expectations for a December rate cut from the Bank of England (BoE) soaring from 61% to an astonishing 81%. This significant shift stems from data that missed analysts’ forecasts across the board, raising concerns about the strength of the UK economy.

As the report unfolded, the German ZEW survey also failed to meet expectations, but it has had minimal impact on the market given the European Central Bank’s (ECB) neutral stance. While several ECB officials reiterated that inflation risks remain balanced and interest rates are appropriately set, the focus is squarely on the BoE as it grapples with the implications of the latest employment data.

In a statement, BoE official Silvana Tenreyro acknowledged the weaker job figures but maintained a hawkish outlook, suggesting that the central bank is still inclined towards cautious monetary policy adjustments. This comes as the United States observes a federal holiday today, Veterans Day, resulting in a closed bond market while the stock market remains open for trading.

Adding to the uncertainty, the ADP was expected to release its weekly jobs data at 13:15 GMT (08:15 ET), but there is confusion about whether this report will be published today or pushed to tomorrow. This unpredictability has traders on edge, as the upcoming US labour market data is critical for the Federal Reserve’s next moves.

Market analysts are urging investors to remain vigilant as developments unfold. The softer employment landscape in the UK raises questions about economic resilience, impacting decisions at the BoE. With the stakes this high, the potential for a market-moving release from the ADP could further influence the trajectory of interest rates.

As the situation develops, all eyes will be on the BoE and the implications of today’s data. Investors and analysts alike should prepare for further updates, as the financial landscape could shift dramatically based on upcoming releases and statements from key officials.

Stay tuned for more breaking news as this story evolves.