With the Bank of England linking interest rate increases to the UK unemployment rate the nation’s jobless figures will be scrutinised more than ever in the months ahead, and today’s surprising figures are likely to call the BoE’s timeline for raising rates into question.
The Pound Sterling to Euro Exchange Rate was in the region of 1.1910 as of 10:20 GMT.
While economists expected the UK unemployment rate to hold at 7.8 per cent in the second quarter it actually fell to 7.7 per cent – easing closer to the 7 per cent joblessness the BoE is waiting for.
The reports published by the Office for National Statistics also showed that jobless claims dropped by 32,600 – significantly more than the decline of 21,000 forecast.
Meanwhile, the UK economy added 80,000 positions rather than the 55,000 predicted.
Although pay growth slowed to 1 per cent in the third quarter, the employment figures are still the latest in a stream of surprisingly strong UK data and add to the improving economic picture being painted.
1 Euro is currently worth 0.8395 pence
According to economist Simon Hayes this result is likely ‘to add to market concerns that the Monetary Policy Committee will raise the policy rate well ahead of its guidance of 2016’. However, Hayes went on to assert that ‘we still believe unemployment is likely to fall only slowly and that a rise in the policy rate remains a distant prospect.’
In the aftermath of the report’s publication the Pound strengthened against currency rivals including the US Dollar and Euro.
Sterling surged to a seven-month high against the US Dollar and an almost nine-month high against the Euro.
In response to the Pound’s climb currency strategist Peter Kinsella observed; ‘The Pound is likely to maintain its recent momentum in the near term. It will probably take another two years before the unemployment rate drops to the 7 per cent target. Still, a decline in jobless claims will no doubt help in terms of sentiment.’
Tomorrow BoE officials, including Governor Mark Carney, will testify to Parliament and Pound movement could be triggered as a result.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5797 >
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1910 >
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.6984 >
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9602 >
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6352 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8395 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5893 <
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5113 <
(As of 10:20 GMT)
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