BoE vote split keeps Sterling low, labor data the key release this week

The Pound started the week trading aimlessly, with a lack of UK data causing investors to refrain from making bold moves ahead of the Bank of England's upcoming interest rate decision.

On Thursday, the central bank delivered the widely anticipated decision to keep interest rates unchanged, maintaining the base rate at 5.25% for the sixth consecutive time.

However, this month's voting split revealed divergence, with 7 out of 9 Monetary Policy Committee members choosing to maintain rates unchanged, while 2 officials advocated for an immediate rate cut.

The notably more dovish voting split prompted markets to increase their expectations for a June interest rate cut, consequently weakening Sterling sentiment in the aftermath of the release.

As Friday unfolded, the Pound remained on the defensive, facing difficulty in strengthening against its peers, even with the release of some positive preliminary GDP data.

The UK's preliminary GDP data for Q1 of 2024 revealed that the UK economy grew by 0.6%, rebounding from a previous -0.3% reading in the final quarter of 2023, and surpassing expectations of 0.4%.

Despite the better-than-expected GDP reading, which confirmed the UK's exit from its technical recession at the end of 2023, Sterling continued to trade sideways following the release.

Looking ahead for the Pound, the focal data release this week will be the UK's latest labor data.

Set for release on Tuesday, the UK's upcoming unemployment data is projected to indicate that unemployment remained steady at a six-month high of 4.2% in March.

Similarly, UK average earnings, excluding bonuses are anticipated to moderate during the same period. If the data aligns with expectations, indicating a slowdown in the UK labor market, this could reinforce bets on a BoE rate cut and consequently impede GBP's trade.

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