• GBP/USD bounced up above 1.3300, but remains relatively close to two-month lows in the 1.3260 area.
• The Pound showed a mild reaction to the bright UK employment data as traders await the BoE's decision to take positions.
• The BoE is expected to leave rates on hold later on the day and hint at a neutral stance.

The British Pound (GBP) trims losses against the US Dollar (USD) on Thursday, but remains near the two-month low hit on Wednesday. The upbeat UK employment figures have failed to boost the Pound's recovery, as investors are reluctant to place large GBP long positions ahead of the Bank of England monetary policy decision, due later in the day.

The UK Unemployment Rate declined unexpectedly to 4.9% in the three months to April, down from 5% in the previous period, according to data released by the Office for National Statistics on Thursday. Net employment increased by 100K in the mentioned period, down from the previous 148K increase, but above the 80K consensus.

Beyond that, wages continued to grow at a strong pace, keeping pressure on inflation. The Average Earnings Excluding Bonus remained steady at 3.4% yearly growth, against expectations of a slowdown to 3.2%, and including bonus, salaries grew at a 4.4% pace, also unchanged from the previous period.

The BoE is expected to stand pat on rates

Later in the day, the Bank of England (BoE) is expected to leave its Bank Rate unchanged at the current 3.75%. Data released on Wednesday revealed that UK inflation steadied in May, and the US-Iran peace deal has raised expectations that the energy shock will gradually unwind, which gives the bank some leeway to maintain its "wait-and-see" stance.

The Federal Reserve (Fed), on the other hand, delivered a rather hawkish hold on Wednesday in the first meeting chaired by Kevin Warsh. The bank left its benchmark rate in the 3.50%-3.75% range and released a shorter statement removing language hinting at an easing bias.

The Fed acknowledged an improvement in economic activity and a stronger labour market, despite the uncertainty stemming from the Middle East conflict. Interest rate projections, the so-called "dot plot", showed that nearly half of the committee members foresee a rate hike before the year's end. US Treasury yields jumped after the event, and the US Dollar appreciated against its main peers.