COMMENT-BoE August cut would take wind out of pound's sails

The Bank of England's first interest rate decision following next month's UK general election could see the pound cede some of its recent gains if the Old Lady of Threadneedle Street, as the central bank is known, opts to cut.

Doves advocating a BoE rate reduction on August 1 - four weeks after the UK election, seized on Tuesday's disclosure that the UK jobless rate unexpectedly rose to 4.4% in April, its highest level for 31 months, as a sign the labour market is cooling.

GBP/EUR has risen nearly 2.5 cents to a 22-month high since plumbing a 1.1600 low immediately after the BoE's dovish hold on May 9. GBP/USD scaled a 13-week peak of 1.2825 last Friday, around 3.75 cents above its May 9 low.

CFTC data on FX positioning showed the net GBP long rose to 43,210 contracts in the week ended June 4, its highest level since early April.

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