Pound rallies to 1-month high as UK jobless rate falls to 7-year low, BoE minutes in focus

The UK currency surged to a one-month high on Friday (17 April) helped by strong labour market data and a weak dollar while the market awaited crucial US inflation data ahead of next week's BoE minutes.

The GBP/USD jumped to 1.5004 as of 9.35 GMT, its highest since 19 March, from the previous close of 1.4934. The pair that had fallen to a new five-year low of 1.4565 earlier this week has so far rallied 2.5% on the week. On the month, the sterling is up 1.26%, partly reversing the 4% loss in March.

The ILO unemployment rate of the UK in the three months to March dropped to 5.6%, its lowest since early 2008, from 5.7% for the same period in the previous month.

Also, average earnings excluding bonus rallied 1.8% more than the 1.6% rise in February and beating the consensus estimate of 1.7%.

The March CPI data earlier this week was weaker than expected, but the overall dollar weakness supported the pound all these days until the job market surprise provided an additional boost. Next week's BoE minutes are the next important event from the UK.

The US dollar is trading off its recent highs thanks to a set of dovish data and increasing bets that the Fed will be forced to postpone its first rate increase since 2006 to a later date this year.

The USD index dropped to 97.28 on Thursday, its lowest since 8 April, before ending down 0.67% on the day at 97.67. The gauge has moved down from the previous close on Friday in Asia to 97.51. So far this week, the index is down 1.8%.

Boston Fed President Eric Rosengren said the US economy is not yet ready for higher short-term rates as it has not met the current inflation and job market performance goals.

The market is now waiting for the US March CPI data due later in the day. The year-on-year headline inflation rate is forecast to repeat February's 0% while the core measure is seen at 1.7%, unchanged from the previous month.