The British pound edged higher against the dollar and the euro on Tuesday after mixed labour market data, which should clear the way for the Bank of England to lower interest rates next month but proceed at a measured pace.

British pay grew at its slowest rate in more than two years in the three months to August, according to official data, but the unemployment rate fell to 4% - its lowest reading this year - and employment jumped by the most on record.

However, the statistics agency stepped up its health warning over the Labour Force Survey amid falling response rates, saying it likely overstated employment growth and the fall in unemployment.

Stickier inflation in the UK has supported the pound this year as analysts bet that the BoE would be slower and later to cut interest rates, but shifting bets have pushed it lower in recent weeks.

The pound was last up 0.2% at $1.3084, hovering above last week's one-month low of $1.3011.

It has fallen by over 2% this month after BoE Governor Andrew Bailey said the central bank could move more aggressively to cut interest rates if inflation pressures continue to weaken.

A readout on British inflation is scheduled on Wednesday, where the headline consumer price index is expected to fall to 1.9%, below the BoE's 2% target for the first time since mid-2021.

Source : Reuters