GBP/USD stays on the back foot and edges lower toward 1.30 after data published by the UK's Office for National Statistics (ONS) showed that the ILO Unemployment Rate edged lower to 3.8% in three months to February from 3.9% in January. Economists at ING expect the pair to tick down towards 1.2850.

Unemployment rate dips back to pre-Covid levels

“The UK has just released employment data for February, showing the ILO unemployment rate dipping to 3.8% – back to pre-Covid levels – and average earnings rising as expected back to 5.4% 3m average year-on-year. For the time being, this kind of data can probably support market expectations of a Bank of England Bank Rate above 2.00% by year-end (versus 0.75% currently). Any rude awakening for BoE policy expectations will probably have to wait for the 5 May BoE rate meeting.”

“We prefer any GBP strength to be played out against the euro and the Japanese yen, while cable still looks vulnerable to 1.2850 in a strong dollar environment.”