The British pound weakened to $1.35 after fresh economic data signaled a notable slowdown in the labour market, strengthening the case for a Bank of England rate cut. Wage growth came in below expectations, with private sector pay, a key metric closely monitored by the central bank, also decelerating. Meanwhile, the unemployment rate rose to its highest level since 2021, and the number of payrolled employees posted the steepest drop since 2020, suggesting early signs of the impact from higher National Insurance Contributions (NICs) and the recent increase in the National Living Wage. While the Bank of England is mostly expected to leave interest rates unchanged at its policy meeting next week, market odds for a rate cut in August have increased. Traders are also closely watching upcoming monthly GDP data and the government’s spending review, both due later this week, for further insight into the UK’s economic trajectory.