UK labour market data paint a picture of rising unemployment, and rising wages. That’s not unusual – wage data will lag the employment series – but while it won’t prevent the market growing in confidence the next 25 bps hike (to 5 ½%) will be the last of this cycle. 

In the very near term, Thursday’s ECB meeting is a bigger driver of EUR/GBP than UK rate expectations, but we expect falls in both monthly GDP and manufacturing output (for July) when data are released on Wednesday. If the ECB adopts the ‘hawkish hold’ position, that could be the last chance to short GBP for a while.