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The British Pound holds gains after the UK employment report met expectations.
The UK's jobs market is hardly inspiring, but at least there were no rude surprises in the September release that might have upset the pound.
Helping Sterling hold its Monday gains is news that the UK unemployment rate remained at 4.7% in July, while PAYE payroll data showed just 8K jobs were lost in August.
Although payroll numbers have fallen in all months save one since last year's budget, this reading represents a softer pace of decline and could hint that the labour market is steadying following months of job losses.
"Those looking for a dramatic development in the UK labour market will have been underwhelmed by this morning’s report from the ONS. Most of the headline indicators were bang in line with expectations," says Sam Hill, Head of Market Insights at Lloyds Bank.
These wage increases are still too high to be consistent with the Bank of England's 2.0% inflation target, and will contribute to the Bank's decision on Thursday to leave interest rates unchanged.
The steady unemployment rate will also calm the 'doves' on the Bank of England's rate-setting committee who might have been inclined to vote for further rate cuts on account of a softening labour market.
Given this, UK short-term bond yields are likely to remain supported at superior levels to those in peer countries, which lends the pound support.
Following the ONS job figures, we see the pound to euro exchange rate holding near the day's open at 1.1560, while the pound to dollar exchange rate rises to 1.3628, which is 0.20% higher on the day.
Elsewhere, sterling extends a short-term recovery against the Australian, Canadian and New Zealand dollars, but registers a daily loss against the yen.
"While the employment backdrop looks to have stabilised a touch, risks overall remain tilted to the downside, not only as broader economic momentum remains anaemic at best, but also as the 26th November Budget looms, with uncertainty in the run up to Chancellor Reeves's announcement likely to keep a lid on business activity for the time being," says Michael Brown, Senior Research Strategist at Pepperstone.
The next test for sterling is Wednesday's inflation data release, where an above-consensus figure could offer further support.
However, with inflation expectations already elevated, the big surprise would be on a below-consensus reading that would allow markets to tentatively price in further rate cuts at the Bank of England.
Here, the pound would come under pressure.
"A hit or miss versus expectations on inflation data tomorrow should still be more significant than an essentially in-line-with-expectations labour market report," says Hill.