After a recent decline, GBP/USD is showing signs of recovery.
The British pound sterling is regaining its strength against the US dollar, with the current GBP/USD exchange rate at 1.2560.
Yesterday, the release of British statistical data brought about mixed and intriguing results. The unemployment rate for the three months ending in April dropped to 3.8%, surpassing the forecasted 4%. Moreover, the growth rate of average earnings, excluding bonuses, reached a post-pandemic high.
These developments have taken many by surprise, as the consensus expectation was a weakening in the employment sector following twelve consecutive interest rate hikes. Instead, labor shortages are impacting wage dynamics, resulting in a contraction of the labor market and significant wage increases. These factors collectively contribute to potential inflationary pressures, which are now a cause for concern for the Bank of England (BoE).
The BoE is anticipated to continue its path of interest rate hikes throughout the summer. The next meeting, scheduled for June 22, is expected to see the lending rate rise to 4.75% per annum.