British Pound hits fresh two-month lows sub-1.3220 as BoE stands pat on rates

• GBP/USD extends losses below 1.3220 following the BoE's interest rate decisions.
• The Bank left its benchmark rate unchanged at 3.75% as widely expected.
• Data released earlier on the day revealed that UK unemployment declined unexpectedly in April.

The British Pound (GBP) remains on the defensive against the US Dollar (USD) on Thursday, with the GBP/USD pair hitting fresh two-month lows near 1.3200, following the Bank of England’s (BoE) decision to leave interest rates unchanged.

No surprises at June’s BoE monetary policy meeting. The Bank Rate remains steady at 3.75% as widely expected, with two policymakers calling for a rate hike, as Swati Dingra joined Huw Pill on the hawkish side. The bank also cut inflation forecasts for this year and upgraded underlying growth compared to April’s estimates.

UK Unemployment Rate declined unexpectedly in April

Earlier on the day, data released by National Statistics showed that the UK Unemployment Rate declined to 4.9% in the three months to April, down from 5% in the previous period, against market expectations of a steady 5% rate

The report also stated that the UK economy created 100K jobs in the mentioned period, down from the previous 148K increase, but above the 80K consensus. In this context, wages continued growing at a strong pace, with Average Earnings Excluding Bonus steady at 3.4%, against expectations of a slowdown to 3.2%. Including bonuses, salaries grew at a 4.4% yearly rate, unchanged from the previous month.

The pound, however, remains on its back foot as the Federal Reserve (Fed) delivered a rather hawkish hold, in the first meeting chaired by Kevin Warsh, which sent the US Dollar rallying across the board. The bank left its benchmark rate in the 3.50%-3.75% range, but removed language hinting at an easing bias from the statement, and the interest rate projections showed that nearly half of the board members foresee a rate hike before the end of the year.