21 Jan 2014
GBP/USD pares losses with tomorrow's BoE minutes and UK jobs numbers in focus
FXstreet.com (London) - GBP/USD saw a sharp drop at the open of the session after US markets were closed yesterday before pegging back losses.
Today will see quiet day of data announcements on either side of the Atlantic, which will likely be reflected in the GBP/USD price action. However, tomorrow GBP will be in focus with a slew of data releases and the minutes from the Bank of England monetary policy committee meeting on 10 January.
BoE's 7.0 percent unemployment threshold under scrutiny
UK unemployment numbers are expected to see a further decline to 7.2 percent, quickly closing in on BoE governor Mark Carney’s threshold for a hike in the record-low base rate from 0.5 percent. Carney has been consistent in stating that the 7.0 percent level is a threshold and not a trigger. It has been anticipated that he will allow the declines in unemployment numbers to run further, however the BoE minutes may give clues as to whether the BoE plans to do so formally through a revision of the threshold or simply on a discretionary policy basis.
Wages remain subdued
The BoE was given positive news last week when CPI inflation feel to 2.0 percent, in line with its target rate, for the first time since November 2009. However, inflation continues to outstrip wage rises, and while inflation has been brought down to the target rate, it is the first time it has done so in more than four years.
With the November employment rate set to be released at the same time as the BoE MPC minutes (9:30 GMT), the importance of the jobs numbers will be amplified by the BoE’s language surrounding the 7.0 percent threshold.
GBP/USD declined to USD1.6411 on the opening of the London session, but has won back the majority of losses to trade at USD1.6426.
Today will see quiet day of data announcements on either side of the Atlantic, which will likely be reflected in the GBP/USD price action. However, tomorrow GBP will be in focus with a slew of data releases and the minutes from the Bank of England monetary policy committee meeting on 10 January.
BoE's 7.0 percent unemployment threshold under scrutiny
UK unemployment numbers are expected to see a further decline to 7.2 percent, quickly closing in on BoE governor Mark Carney’s threshold for a hike in the record-low base rate from 0.5 percent. Carney has been consistent in stating that the 7.0 percent level is a threshold and not a trigger. It has been anticipated that he will allow the declines in unemployment numbers to run further, however the BoE minutes may give clues as to whether the BoE plans to do so formally through a revision of the threshold or simply on a discretionary policy basis.
Wages remain subdued
The BoE was given positive news last week when CPI inflation feel to 2.0 percent, in line with its target rate, for the first time since November 2009. However, inflation continues to outstrip wage rises, and while inflation has been brought down to the target rate, it is the first time it has done so in more than four years.
With the November employment rate set to be released at the same time as the BoE MPC minutes (9:30 GMT), the importance of the jobs numbers will be amplified by the BoE’s language surrounding the 7.0 percent threshold.
GBP/USD declined to USD1.6411 on the opening of the London session, but has won back the majority of losses to trade at USD1.6426.