Sterling declined on Tuesday as data revealed growth in UK wages slowed down in the three months to November, supporting the notion the Bank of England may slash interest rates sharply in 2024.

At the time of writing, the Pound was down 0.37% at $1.2679 after trading around 0.3% lower at $1.2683 before the figures were published.

Between September and November, annual earnings growth, excluding bonuses, stood at 6.6%, a fall from a 7.2% increase in the three months to October, Reuters reports.

Meanwhile, pay growth, including bonuses, decelerated to 6.5% from 7.2% in the three months to October, falling short of economists’ projections of a 6.8% figure.

The number of vacancies posted declined by 49,000 in the quarter between October and December, according to the Office for National Statistics. The UK’s unemployment rate was steady in November at 4.2%.

“Signs that the labour market is gradually normalising will reinforce the view that rate cuts could come as early as May,” stated Jake Finney, economist at PwC UK.

The Euro rose 0.15% against the Pound at 86.15 pence.

On Tuesday, traders forecast around 125 basis points of rate cuts from the Bank of England in 2024, a marginal rise from before the figures were released.

They expect around a 93% chance of the central bank’s first rate cut in May, as per money market pricing.

So far this year, Sterling has fallen around 0.5% against the greenback as stronger-than-forecast US economic and inflation data bolstered the Dollar.

Last year, the Pound rallied 5.2% as it recovered from a steep decline the year before, and Britain’s economy performed better than forecast.

“Another big drop in wage growth in November supports our view that domestic inflationary pressures are fading fast,” according to Ashley Webb, UK economist at Capital Economics.

“But the tightness of the labour market will probably mean that the Bank of England maintains its hawkish bias at its policy meeting in February.”