GBP/USD RALLIES POST BOE AND FED DECISIONS, EYES ON US NONFARM PAYROLLS DATA

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  • GBP/USD rises past 1.2700 after BoE holds rates, signaling unexpected dovish tilt.
  • BoE's divided vote and hints at future rate cuts by Governor Bailey boost Pound's prospects.
  • US sees two-month high in jobless claims amid recovering manufacturing, impacting market sentiment.
  • Focus shifts to US Nonfarm Payrolls, with anticipated job growth slowdown and minor uptick in unemployment.

The Pound Sterling (GBP) gained some ground against the US Dollar (USD) during the North American session following back-to-back monetary policy decisions by the Bank of England (BoE) and the US Federal Reserve (Fed).

Cable advances despite BoE’s signaling end of tightening cycle

On Thursday, the Bank of England decided to hold rates unchanged at 5.25%, signaling that the tightening cycle most likely ended. Nevertheless, the decision was not unanimously taken, with two BoE policymakers voting for another hike while one voted for a cut. The statement shifted more dovish than previous statements, as it highlighted “he risks to inflation are more balanced.”

The BoE Governor Andrew Bailey said that policy would need to remain restrictive while adding the bank would become data dependent. He acknowledged the removal of hawkish language to the statement, opened the door to begin cutting rates, and emphasized that if they do, policy “would still be restrictive.”

Bailey added he doesn’t foresee a recession in an interview with Bloomberg TV, and added: “I'm not going to give a view on how many cuts there'll be and when they will be.”


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