Sterling rises before UK growth data
Sterling rose in European trade on Thursday against a basket of major rivals, resuming gains against the US dollar after a short hiatus and on track for a week high ahead of important UK growth data.
The data will likely provide important clues on the odds of a UK interest rate cut in June amid current division in the Bank of England on the path ahead for monetary easing.
The Price
The GBP/USD price rose 0.2% today to $1.3287, with a session-low at $1.3258.
The pound lost 0.35% on Wednesday against the dollar on profit-taking away from a week high at $1.3361.
UK Rates
Last week, the Bank of England cut interest rates by 25 basis points to 4.25%, the lowest since March 2023, marking the fourth such UK rate cut since the current cycle of policy easing started in August 2024.
The vote split was unexpected, with 5 members voting in favor of the cut and 2 voting in favor of a deeper 0.5% cut, while two voted in favor of holding rates unchanged.
The odds of a UK 0.25% interest rate cut in June stood at 30%.
UK Growth
Now investors await important UK GDP growth data later today, expected to highly impact the monetary policy decision.
UK GDP growth is expected at 0.6% in the first quarter, up from a 0.1% rise in the previous quarter.
Aussie shines after strong labor data
The Australian dollar rose in Asian trade on Thursday against a basket of major rivals, resuming gains against the US dollar and approaching a five-month high following strong Australian data.
The data renewed the pressure on the Reserve Bank of Australia’s policymakers and tanked the odds of a rate cut next week.
The Price
The AUD/USD price rose 0.4% today to $0.6458, with a session-low at $0.6422.
The pair lost 0.65% on Wednesday away from a week high at $65.02, and after marking a five-month high at 65.15 last week.
Australian Labor Sector
Australia's unemployment rate was unchanged in April at 4.1%, same as March, and matching expectations.
The Australian economy added 89.0 thousand new jobs in April, easily beating estimates of a 20.9 thousand addition, while March's reading was revised to show the addition of 32.2 thousand jobs instead of 36.4 thousand.
The data renewed inflationary pressures on the Reserve Bank of Australia’s policymakers, which hurt the odds of a rate cut in May.
The RBA held interest rates unchanged at 4.1% at the previous April meeting but opened the door for a May rate cut.
The current odds of such a rate cut by the RBA in May currently stand at 75%.
The recent reduction of global trade tensions led analysts to reduce their expectations for Australian rate cuts this year.
The markets now expect the RBA to cut rates to 3.1% by the end of the year, up from 2.85% in previous forecasts.
Australian economy adds more jobs than expected in April
The Australian economy added 89.0 thousand new jobs in April, easily beating estimates of a 20.9 thousand addition, while March's reading was revised to show the addition of 32.2 thousand jobs instead of 36.4 thousand.
