During Asian trading hours on Friday, GBP/USD made gains, approaching the 1.2540 mark, propelled by the release of better-than-expected UK Gross Domestic Product (GDP) figures for the first quarter. The quarterly GDP growth stood at 0.6%, a notable turnaround from the previous quarter’s 0.3% decline, surpassing forecasts of a 0.4% increase. Similarly, the year-on-year GDP growth saw a positive uptick of 0.2%, bouncing back from the prior 0.2% contraction.
Despite these encouraging economic indicators, the Pound Sterling (GBP) faced headwinds following the Bank of England’s (BoE) decision to maintain the interest rate at 5.25% on Thursday. BoE Governor Andrew Bailey’s post-decision remarks, as reported by Reuters, hinted at the possibility of a rate cut in the upcoming month, contingent upon forthcoming inflation, activity, and labor market data. This cautious stance towards potential future rate adjustments weighed on the British Pound, consequently weakening the GBP/USD pair.
In parallel, the US Bureau of Labor Statistics (BLS) released data illustrating a higher-than-anticipated number of individuals filing for unemployment benefits. Initial Jobless Claims for the week ending May 3 surged to 231,000, exceeding projections of 210,000 and marking an uptick from the preceding week’s 209,000 reading. This unforeseen rise suggests a potential shift towards a more dovish policy stance by the Federal Reserve (Fed), thereby exerting downward pressure on US Treasury yields and undermining the performance of the US Dollar (USD).
Looking ahead, market participants anticipate the release of the preliminary US Michigan Consumer Sentiment Index on Friday, with forecasts pointing towards a marginal decline in May. This closely watched index gauges sentiment among US consumers, encompassing assessments of personal finances, business conditions, and purchasing conditions.
