Sterling declined in European trade for the sixth straight session against dollar, hitting two-year lows after bearish data from the UK, which cut chances of the cycle of rate hikes in Britain throughout 2020.

The dollar on the other hand jumped to fresh 20-year highs following forecast-beating inflation data last month.

GBP/USD fell 0.7% to 1.2165, the lowest since May 2020, after closing down 0.5% on Wednesday, the fifth loss in a row.

Bearish Data

UK economy grew 0.8% in the first quarter of the year, missing estimates of 1%, and down from 1.3% in the fourth quarter of last year.

On a monthly basis, UK economy contracted 0.1% in March, compared to a 0.1% growth rate in February. 

Such data cut down chances of several more UK rate hikes in 2022.

BoE Estimates 

Bank of England decided to hike rates by 25 basis points last week to 1%, the fourth increase in a row.

The members are preparing for another 25 basis points, however they warned from a recession if rates were increased by 0.50%.

It didn't stop at this, the BoE went as far as predicting an actual recession next year by 0.25%.

The Dollar

The dollar index rose 0.5% on Thursday for the sixth straight session, hitting a 2002 high at 104.54 against major rivals. 

The gains are bolstered by very high inflation data for the UK last month, paving the way for several more 0.5% Fed rate hikes this year. 

Estimates

As for the pound, analysts now expect it to fall as low as 1.2 while potentially even piercing that important barrier in the months to come. 

US economy grew 0.8% in the first quarter of the year, missing estimates of 1%, and down from 1.3% in the fourth quarter of last year.

Oil futures declined over 1% in Asian trade as the dollar index climbed for the sixth straight sessions, as markets price in developments in the Covid 19 wave in China, after reports that cases are falling down again.

On the Ukrainian front, the EU is not expect to execute a threat to cut off Russian oil supplies after protests from several EU members. 

As of 06:08 GMT, US crude futures declined 1.16% to $105.63 a barrel, while Brent futures due in July declined 1.24% to $106.14 a barrel, as the dollar index rose 0.14% to 104.15.

From the US, producer prices are expected up 0.5% last month, while core prices are expected up 0.6%, slowing don from 1%.

US unemployment claims are expected down 10K in the week ending May 7 to 190K, while continuing claims are expected down 4K to 1.38 million. 

Official US data showed crude inventories rose 8.5 million barrels last eek, while analysts expected a 1 million barrels deficit, with total stocks now rising to 424.2 million barrels. 

Gasoline stocks fell 3.6 million barrels, down 5% from 5-year averages, while distillate stocks fell 0.9 million barrels.

Chinese authorities is clamping down heavily on any opposition to its zero-covid harsh policies against the pandemic, in order to contain the crisis quickly and return to solid growth.

China's central bank has issued statements asserting full support of the economy to provide enough liquidity and underpin small businesses.

Latest World Health Organization data showed global Covid 19 infections up to 516.48 million cases, with the death toll hitting 6.258 million.

Baker Hughes data showed US oil rigs rose by 5 rigs to 557 rigs, the highest since March 2020, while US output steadied at 11.9 million barrels.

US output is down 1.2 million bpd or 10% from a record high at 13.1 million bpd scaled in March 2020, while hitting a record low in August 2020 at 9.7 million bpd.

US stock indices rose on Wednesday following a spate of upbeat data.

US consumer prices rose 8.3% in April, beating estimates of 8.1%, and slightly below 8.5% in the previous reading.

Core prices, excluding food and energy, rose 6.2%, beating estimates of 6%.

On a monthly basis, consumer prices rose 0.3%, while core prices rose 0.6%.

Dow Jones rose 0.8% as of 14:22 GMT to 32,437, while S&P 500 rose 0.8% to 4,034, as NASDAQ added 0.54% to 11,793.