GBP-USD traders are closely watching the Bank of England (BoE) and the unpredictable U.S. economic environment. The upcoming scenarios that could influence the sterling against the dollar are being examined.

One key focus is on Clare Lombardelli, the Bank of England’s next deputy governor for monetary policy, who is expected to take up her role on July 1, 2024. She is currently facing questions from lawmakers in parliament’s Treasury Committee. Lombardelli, who previously served as the OECD’s Chief Economist, brings a fresh perspective to the role.

Despite mixed labor market data in the UK, including weakening job numbers but strong wage growth, the GBP-USD reacted cautiously. This may result in the BoE holding off on any significant rate cuts until August, despite an increase in unemployment to 4.2% and consecutive negative payroll revisions.

On the U.S. side, the dollar is strengthening due to rising Treasury yields, reaching a five-month high of 4.60%. This increase is driven by concerns over inflation and geopolitical tensions. Treasury Secretary Janet Yellen acknowledges a decrease in inflation but emphasizes the need for further measures to stabilize the economy.

The Federal Reserve’s decision to delay rate cuts amidst persistent inflation has boosted the dollar’s strength in response to GBP pressures. The U.S. industrial sector also demonstrated resilience with a 0.4% increase in production, indicating an economy that is standing strong.

From a technical analysis perspective, the GBP-USD is facing challenges. Last week marked its worst performance since June 2020, and the pair is on track for its fourth consecutive month of decline, the longest since January to April 2022. Unless there is a significant negative development for the USD, the weakness in the GBP-USD is expected to continue.

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