The GBP/USD currency pair experienced a significant price movement following the release of a positive UK jobs report and the Bank of England’s (BOE) response. The report showed that the UK unemployment rate fell to 4.7% in the three months to April, the lowest level since August 2020. Additionally, the number of people in employment increased by 113,000, beating expectations.
The BOE responded to the positive jobs report by stating that it would slow down its bond-buying program, which is aimed at supporting the UK economy during the pandemic. The central bank also raised its growth forecast for the UK economy to 7.25% for 2021, up from its previous estimate of 5%.
The combination of the positive jobs report and the BOE’s response led to a surge in the value of the GBP/USD currency pair. On June 15th, the day of the announcement, the pair rose from around 1.4100 to a high of 1.4175, a gain of around 0.5%. The pair continued to climb in the following days, reaching a high of 1.4240 on June 17th.
The positive jobs report was seen as a sign that the UK economy was recovering faster than expected from the pandemic. The increase in employment was driven by the reopening of businesses as lockdown restrictions were eased, and the BOE’s decision to slow down its bond-buying program was seen as a vote of confidence in the UK economy.
The rise in the value of the GBP/USD currency pair was also driven by a weaker US dollar. The US Federal Reserve had recently signaled that it would maintain its accommodative monetary policy for some time, which put pressure on the dollar.
However, some analysts have warned that the positive jobs report may not be sustainable in the long term. The UK government’s furlough scheme, which has supported millions of workers during the pandemic, is set to end in September. This could lead to a rise in unemployment and a slowdown in the UK economy.
Additionally, the BOE’s decision to slow down its bond-buying program could lead to higher interest rates in the future, which could put pressure on the UK economy and the GBP/USD currency pair.
In conclusion, the positive UK jobs report and the BOE’s response led to a significant price movement in the GBP/USD currency pair. The rise in employment was seen as a sign of a faster-than-expected recovery from the pandemic, and the BOE’s decision to slow down its bond-buying program was seen as a vote of confidence in the UK economy. However, some analysts have warned that the positive jobs report may not be sustainable in the long term, and the BOE’s decision could lead to higher interest rates in the future.
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- Source: https://zephyrnet.com/gbp-usd-price-analysis-boe-relieved-after-upbeat-uk-jobs/
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