GBP/USD Trades Optimistic After Strong Employment Report Reduces BOE Rate Cut Likelihood

The Pound is trading somewhat bullish against the US dollar early on Wednesday after a stronger than expected UK jobs report dipped the likelihood of a rate cut by the BOE in its next monetary policy meeting. At the time of writing, GBP/USD is trading at around 1.305.

On Tuesday, the employment report released revealed an uptick in the number of people with jobs in the UK. The number of employed people climbed 208k higher to 32.90 million, beating economists’ expectations for a gain of 110k. This was also the fastest pace of growth seen since January 2019.

Following the release of the report, the chances of a 0.25% rate cut by the Bank of England declined from around 67% to 62%, while GBP/USD strengthened by around 0.3%. However, markets still remain cautious to trade GBP as there remains uncertainty on Brexit talks, and whether Britain will negotiate a deal with the EU by the end of the year.

Meanwhile, although the chances of a rate cut still remain high, analysts are hoping that the BOE put off this decision until later this year when more clarity emerges on Britain’s exit from the EU.