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The pound advanced after employment rate hit a record high, weakening the case for an imminent interest-rate cut.

Sterling rose 0.1% to $1.3027 after earlier dropping as much as 0.1%. Money markets are pricing a 65% chance that the Bank of England will lower borrowing costs on Jan. 30, down from 67% on Monday.

The number of people in work in the U.K. surged by 208,000, the most in almost a year and double the market forecast. The jobless rate held at a four-decade low of 3.8%. The figures end a run of weak data and confirm the labor market as the most resilient part of the British economy.

READ MORE: The BOE’s In-House Report That May Hold Key to Rate-Cut Debate

Disappointing releases and a flurry of dovish comments from policy makers in recent weeks fueled speculation that the BOE will act to stimulate the economy. Combined with fears of a messy divorce from the European Union and fading optimism from the Conservatives’ decisive election victory in December, this has dragged on the pound.

Tuesday’s jobs data may bolster arguments that the BOE decision is not a done deal. Morgan Stanley says it expects interest rates to remain unchanged this year, and if there is a cut, it will be ‘one and done.’

The yields on 10-year gilts declined two basis points at 0.63%.

To contact the reporter on this story: William Shaw in London at wshaw20@bloomberg.net

To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Anooja Debnath

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