GBP/USD rises to near 1.2540, driven by higher UK GDP
|- GBP/USD is gaining ground after the release of higher-than-expected UK GDP data on Friday.
- The Pound Sterling may encounter challenges on a rate cut possibility by the BoE next month.
- US Treasury yields lost ground after the release of weak US Initial Jobless Claims on Thursday.
GBP/USD edged higher to near 1.2540 during Asian hours on Friday, buoyed by the release of higher-than-expected UK Gross Domestic Product (GDP) data for the first quarter. GDP (QoQ) rose by 0.6%, reversing the previous quarter's decline of 0.3%, surpassing expectations of a 0.4% increase. Additionally, GDP (YoY) increased by 0.2%, rebounding from the previous decline of 0.2%.
However, the Pound Sterling (GBP) encountered challenges following the Bank of England’s (BoE) decision to maintain the interest rate at 5.25% on Thursday. Reuters reported that BoE Governor Andrew Bailey mentioned during the post-decision press conference that "a rate cut next month was a possibility," but he intends to wait for inflation, activity, and labor market data before deciding. This has raised the prospect of future rate cuts, putting pressure on the British Pound and weakening the GBP/USD pair.
Subsequently, the US Bureau of Labor Statistics (BLS) released data indicating that the number of individuals filing for unemployment benefits surpassed expectations. Initial Jobless Claims for the week ending May 3 rose to 231,000, exceeding estimates of 210,000 and showing an increase from the previous week's reading of 209,000. This suggests a potential shift toward a less hawkish policy outlook by the Federal Reserve (Fed), resulting in pressure on US Treasury yields and undermining the US Dollar (USD).
On Friday, the preliminary US Michigan Consumer Sentiment Index is forecasted to show a slight decrease in May. This index is a survey that evaluates sentiment among US consumers, encompassing three primary areas: personal finances, business conditions, and buying conditions.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.