Pound Sterling trades flat ahead of Fed-BoE policy, UK labor market data

The Pound Sterling (GBP) trades broadly flat against its major currency peers, consolidating around 1.3350 against the US Dollar (USD) during the European trading session on Wednesday. The British currency struggles for direction as investors have sidelined ahead of a data-packed Thursday.

Investors await the Bank of England’s (BoE) monetary policy announcement, in which it is expected to leave interest rates unchanged at 3.75%, with a 7-2 majority, as inflationary pressures have accelerated globally due to higher oil prices.

Analysts at JP Morgan have forecast that the BoE will remain on pause for the entire year as price pressures in the United Kingdom (UK) region are unlikely to return to the central bank’s 2% target soon.

On Thursday, investors will also focus on the UK labor market data for the three months ending January, which will be released before the monetary policy outcome. The data is expected to show that the ILO Unemployment Rate remained steady at 5.2%, and Average Earnings Excluding Bonuses, a key measure of wage growth, cooled down to 4% Year-on-Year (YoY) from the previous reading of 4.2%.

Meanwhile, the US Dollar also trades flat ahead of the Federal Reserve’s (Fed) interest rate decision at 18:00 GMT. As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades flat around 99.50.

According to the CME FedWatch tool, traders are confident that the Fed will leave interest rates unchanged in the range of 3.50%-3.75%.