GBP/USD has lost ground for a fourth straight day. Currently, GBP/USD is trading at 1.2589, down 0.30% on the day. On the release front, U..S Preliminary GDP came in at 3.1%, matching the forecast. Unemployment claims rose to 215 thousand, just shy of the estimate of 216 thousand. In the U.K., GfK Consumer Sentiment is expected to remain deep in negative territory, with an estimate of -12 points. On Friday, the U.S. releases key inflation and consumer spending data.
The Bank of England is forecasting weak growth for the economy. The bank’s May projection stands at 1.5% in May and 1.6% in 2020, and that is on the assumption that the Brexit process goes smoothly. On Thursday, Deputy Governor Dave Ramsden took issue with his MPC colleagues, saying that he is more pessimistic about the economic outlook and believes that growth will be less than the bank’s forecast. Ramsden warned that a no-deal Brexit without a transition period would have “large negative economic effects”. Ramsden added that even if the U.K. crashed out of the EU without a deal, it did not automatically mean that interest rates should be cut.
Inflation in the U.K. has been moving higher. Consumer inflation pushed above the 2% level in April, with a gain of 2.1%. This marked a 4-month high, and is good news for the BoE, which has an inflation target of 2.0%. The upward trend has continued with shop price inflation, which accelerated to 0.8% in May, up from 0.4% in the previous release.