UK regular pay growth slows to 5.4 from 5.8
Unemployment unexpectedly drops to 4.2 from 4.4
Wages still rising faster than BoE would like
Real pay grows at fastest rate in three years
Investors trim bets on rate cut as job market resilient

LONDON, Aug 13 Reuters British pay grew at its slowest pace in nearly two years, likely reassuring the Bank of England that inflation pressures are easing, and there was a surprise drop in unemployment, official figures showed on Tuesday.

Average weekly earnings, excluding bonuses, were 5.4 higher than a year earlier in the three months to the end of June, down from 5.8 in the three months to May and the lowest since August 2022, the Office for National Statistics said.

However, the jobless rate based on a survey the ONS is currently overhauling fell from 4.4 to 4.2, its lowest since February, bucking expectations of a rise in a Reuters poll of economists.

Sterling strengthened against the U.S. dollar immediately after the data was published.

When it cut interest rates on Aug. 1 after keeping them at a 16year high of 5.25 for nearly a year, the BoE said it would continue to keep a close eye on wage growth. Investors see a roughly oneinthree chance of a September BoE rate cut.

Pay is still growing at nearly double the pace the BoE thinks is compatible with keeping inflation at its 2 target. Data on Wednesday is likely to show inflation back above target.

Today39;s data are consistent with a gradual and cautious dialling…