The British pound was on a downtrend against the US dollar from the Asian session, but its decline accelerated after the release of the UK labour market report. The pound recovered some of its losses after the hawkish tone outlined by Bank of England policymakers before the UK Parliament’s Treasury Committee.
The GBP/USD currency pair declined by over 100 points from an opening high of 1.4009 to hit a low of 1.3905 in the mid-European session, before retracing some of its losses.
The release of the UK labour market report by the Office for National Statistics contributed to the pound’s decline. According to the report, the number of people claiming unemployment benefits declined by 7,200 versus the expected increase of 4,100. However, the decline in the claimant count rate was negated by the increase in the ILO unemployment print, which came in at 4.4%, slightly higher than the expected 4.3% print. The weekly earnings excluding bonuses registered growth coming in at 2.5%, which was higher than the expected 2.4% and the previous 2.3%.
The pound recovered slightly after BoE members started testifying before the UK Parliament hinting at a hawkish outlook. The BoE delegation included the Governor Mark Carney, Chief Economist Andy Haldane and two other members.
The currency pair’s long-term performance is likely to be affected by UK political events even as Theresa May‘s government is rocked with divisions relating to Brexit negotiations. The release of FOMC minutes later today will also affect the pair’s performance.
The GBP/USD currency pair was trading at 1.3961 as at 17:41 GMT having recovered from a low of 1.3905. The GBP/JPY currency pair was trading at 150.27 having rallied from a low of 149.41.
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