13 Nov 2013
Sterling jumps on strong UK jobs numbers
FXstreet.com (London) - Sterling has been given strong support by today’s unemployment numbers from the Office for National Statistics. The third quarter unemployment rate declined to 7.6 percent, from 7.7 percent in the second quarter – the lowest since 2009.
The drop edges the unemployment rate towards the Bank of England’s 7 percent threshold, below which it will consider hiking rates. USD/GBP jumped to USD1.5934 after a morning of range-bound trading between USD1.5890 and USD1.5900.
Claims for unemployment benefit fell by 41,700 in October, beating expectations for a 30k drop. The number of people looking for work fell by 48,000 to 2.47 million. Youth and long-term unemployment both declined.
The better-than-expected jobs numbers will fuel expectations that the BoE will forward revise its forecasts for a rate hike. The BoE initially forecasted that the unemployment rate would not drop below the 7 percent threshold before the second quarter, 2016. However, current trends suggest the threshold may be breached by the third quarter 2015.
Wage pressures remain
The positive UK jobs numbers are a stark contrast to the Eurozone, where unemployment is running at 12.2 percent with little upwards pressure on employment. However, the UK still faces wage issues. Pay growth slowed to 0.7 percent in the third quarter from 0.8 percent, with real wages still under pressure. Yesterday’s below-expected inflation numbers at 2.2 percent will ease some pressure on households, but wage issues continue to threaten UK growth.
The drop edges the unemployment rate towards the Bank of England’s 7 percent threshold, below which it will consider hiking rates. USD/GBP jumped to USD1.5934 after a morning of range-bound trading between USD1.5890 and USD1.5900.
Claims for unemployment benefit fell by 41,700 in October, beating expectations for a 30k drop. The number of people looking for work fell by 48,000 to 2.47 million. Youth and long-term unemployment both declined.
The better-than-expected jobs numbers will fuel expectations that the BoE will forward revise its forecasts for a rate hike. The BoE initially forecasted that the unemployment rate would not drop below the 7 percent threshold before the second quarter, 2016. However, current trends suggest the threshold may be breached by the third quarter 2015.
Wage pressures remain
The positive UK jobs numbers are a stark contrast to the Eurozone, where unemployment is running at 12.2 percent with little upwards pressure on employment. However, the UK still faces wage issues. Pay growth slowed to 0.7 percent in the third quarter from 0.8 percent, with real wages still under pressure. Yesterday’s below-expected inflation numbers at 2.2 percent will ease some pressure on households, but wage issues continue to threaten UK growth.