GBP Surges Above 1.3500 as BoE Stays Hawkish, US NFP Data Looms

The British Pound (GBP) has strengthened to above 1.3500 against the US Dollar (USD), buoyed by hawkish rhetoric from a Bank of England (BoE) policymaker.

On Thursday, BoE Chief Economist Huw Pill stated that the central bank should raise its key interest rate to limit the risk that inflation will stay above its target for a prolonged period. This stance was echoed by two other members in voting for a rate hike in July, with six members backing a hold.

Traders are now bracing for the US August employment report later on Friday, which could shape expectations for the Federal Reserve's (Fed) next policy move. The Nonfarm Payrolls (NFP) report is expected to show 56,000 jobs added in August, with the Unemployment Rate projected to hold steady at 4.1%.

Despite the hawkish tone from Pill, he tempered his comments by stating that this would be a front-loaded adjustment rather than the start of a prolonged and aggressive series of increases. This mixed message supports a stronger bias for the GBP in the short run while cautioning against over-committing to a long hiking path.