GBP/USD has posted gains on Thursday. In the North American session, the pair is trading at 1.3104, up 0.44% on the day. On the release front, there were key events on both sides of the pond. The Bank of England maintained rates at 0.75% in a unanimous (9-0) decision. In the U.S, key consumer inflation reports missed their mark. CPI came in at 0.2%, shy of the estimate of 0.3%. Core CPI dipped lower to 0.1%, missing the forecast of 0.2%. Unemployment claims sparkled with a reading of 203 thousand, beating the forecast of 213 thousand. On Friday, the U.S release retail sales and UoM Consumer Sentiment.
There were no surprises from the BoE, which held the benchmark rate at 0.75%. The Bank raised rates in August, for the only the second time since 2007. In the rate statement, policymakers noted that there had been little change on the domestic front since the August rate hike, but added that there was “greater uncertainty” in the financial markets over the Brexit withdrawal next March. The BoE may decide to stay on the sidelines and hold rates until after the UK leaves the EU in March, in order to minimize the expected disruption that the Brexit will have on the British economy. A lack of rate hikes will make it tougher for the pound to gain, unless the UK economy shows stronger growth than expected.
In the U.S, the red-hot labor market continues to be the envy of industrialized countries around the globe. The unemployment rate is at a remarkable 3.8% and unemployment claims were almost unchanged at 204 thousand, another excellent reading. Despite the strong employment front and a booming economy, inflation remains well short of the Federal Reserve’s target of 2 percent. In August, CPI and Core CPI came in at 0.1% and 0.2%, respectively, falling short of their estimates. The markets are braced for soft consumer spending data on Friday, which could send the dollar lower.
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