The unemployment rate in the UK dropped to 4.2% in August.

• The unemployment rate in the UK decreased to 4.2% in August.

• Despite a slight decrease to 8.1%, wage growth in the UK remained high.

• The private sector PMIs for October in the UK will be released soon.

The unemployment rate in the UK dropped from 4.3% to 4.2% in August, while employment decreased by 82,000 in July. The employment rate fell by 0.3 percentage points to 75.7% in the three months to August 2023, and economic inactivity increased by 0.1 percentage points to 20.9%. Additionally, job vacancies decreased by 43,000 to 988,000, marking the fifteenth consecutive month of decline. Wage growth, including bonuses, increased by 8.1% in August.

The GBP/USD initially fell to $1.22327 before rising to $1.22737 before the labor market report. Subsequently, in response to the labor market numbers, the GBP/USD dropped to $1.22619 before climbing to $1.22769. Currently, the GBP/USD stands at $1.22751, up 0.22%.

The focus will now shift to the UK private sector PMIs, particularly the services sector, which makes up over 70% of the UK economy. Economists expect the S&P Global/CPIS Services PMI to remain at 49.3 in October.

Later in the session, US private sector PMIs, along with corporate earnings from companies such as Coca-Cola (KO), General Electric (GE), General Motors (GM), Microsoft (MSFT), Alphabet (GOOGL), and Visa (V), will also be influential in shaping market sentiment. The US S&P Global Services PMI is expected to decrease from 50.1 to 49.8.