U.K. unemployment fell to 3.7% in the three months through March, the lowest level since 1974, as the number of job openings rose to a new high of 1.3 million.
The Bank of England should hike 2% by year-end. Since starting its tightening cycle last year, the central bank hiked rates three times to 1%.
Some, however, see sterling resuming its downtrend as the threat of the recession and a Brexit-driven trade war loom.
Others, however, downplay the imminent threat of the U.K. and E.U. trade war amid pressure from the U.S. and a lack of appetite among Boris Johnson’s Conservative members.
GBP/USD rose 1.4% to $1.2484.
Bets on another BoE rate hike will continue to garner attention on Wednesday as the U.K. should report its highest pace of inflation since records began in 1988, following a surge in energy prices.
All eyes in the U.K. tomorrow will be on April’s inflation report. Given the 54% hike in household energy bills last month, the headline CPI rate should jump more than 2ppts to above 9%Y/Y for the first time since the series began in 1988, Daiwa Capital Markets said.
The U.K. faces an “apocalyptic” spike in global food prices, fueled by the Russia-Ukraine conflict, Bank of England governor Andrew Bailey said on Monday.
