GBP/USD bounced back from recent losses, trading near 1.3280 during the Asian session on Thursday (5/15). The pair was supported by a weaker US Dollar (USD), as investors weighed the ongoing trade-related uncertainties despite a slight de-escalation in tensions. Market focus now shifts to the release of US Retail Sales and Producer Price Index (PPI) data later in the day.
Speculations are growing that Washington may prefer a weaker dollar to strengthen its trade position. The Trump administration has argued that a strong greenback, relative to weaker regional currencies, hurts US exporters.
However, the downside pressure on the USD may be limited. Improving global trade sentiment has eased recession fears, reducing expectations for an aggressive Federal Reserve (Fed) interest rate cut. According to LSEG data, markets are now pricing in a 74% chance of a 25 basis point cut in September, down from the previous forecast for a cut in July.
Meanwhile, the British pound (GBP) held steady as traders reassessed the Bank of England (BoE) policy outlook following Tuesday's labor market data for the three months ending in March. The report showed slower job growth, a higher unemployment rate and slower wage growth, suggesting employers are cutting back on hiring ahead of higher social security contributions due to come into effect in April.
That said, moderate wage growth could provide some relief to BoE policymakers. Wage trends remain a leading indicator of inflation in the services sector, which continues to drive underlying price pressures in the UK. (Newsmaker23)
Source: FXstreet
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