Sterling fell to a three-month low after Tuesday’s data revealed a slowdown in regular wage growth and a slight increase in unemployment, and also faced pressure from a soaring Dollar following Donald Trump's US election victory.
In early European trading, the Pound fell by as much as 0.5% to $1.2806, its lowest level since 15th August, and at the time of writing was down 0.44% at $1.2814.
Sterling also weakened against the Euro, with the single currency gaining 0.2% to 82.97 pence.
Tuesday's data revealed that British wage growth, excluding bonuses, dropped to its lowest level in over two years in the third quarter. Unemployment in September increased to 4.3% from 4.1%, although the reliability of these figures has been affected by low survey response rates, Reuters reports.
“The easing in private sector regular pay suggests that the Bank of England will continue to cut interest rates gradually,” according to Paul Dales, chief UK economist at consultancy Capital Economics.
“There is little here to suggest the Bank needs to worry that the loosening in the labour market and the easing in underlying wage growth are coming to an end.”
The Pound was already down 0.3% before the data was released, as the Dollar maintained its strong performance following the US election.
President-elect Trump has proposed imposing tariffs of 10% to 20% on all imports and potentially 60% tariffs on Chinese goods, policies that investors believe could negatively impact America's European trading partners.
The Pound has dropped about 1.1% since the election but has performed better than the Euro, which has fallen by around 2.8%.
Britain voted to leave the EU in 2016 and officially exited in 2020, running only a small trade surplus in goods with the United States by mid-2024.
On Monday, the Euro hit its lowest point in two and a half years against the Pound as investors prepared for potentially harsh trade measures.
Trump's cabinet is beginning to take form, with Robert Lighthizer, a strong proponent of tough tariffs, being considered for the top trade position.
The Dollar index, which tracks the currency against six major peers, was up 0.29% at 105.73 on Tuesday, having risen approximately 2% since the election.