Good Morning. The pound rose yesterday again, after better than expected jobs data for the UK. At 08;30am this morning, rates are as follows:
- GBP/EUR 1.1260
- GBP/USD 1.6222
- GBP/AUD 1.8192
- GBP/NZD 2.2742
- GBP/CAD 1.7306
- GBP/CHF 1.6966
- GBP/NOK 9.4462
- GBP/JPY 145.46
- EUR/USD 1.4398
The number of people unemployed in the UK rose by 21,000 between August and October to 2.49 million. The increase was the smallest rise in the jobless total since the 2nd quarter in 2008, Office for National Statistics (ONS) figures showed. The markets were expecting the figures to be much worse, and that’s why the pound rose yesterday.
Analysts said the figures boosted optimism for a rebound in the UK economy in the fourth quarter, although concerns remained that unemployment may rise again next year as the government is forced to rein in spending to reduce a ballooning deficit, and so this spike may be temporary.
Speaking on the data, UK finance minister Alistair Darling said they were “very encouraging” but cautioned it “would be a mistake to believe that somehow the corner has now been turned”.
He also said that the Bank of England and the government would need to work together on exiting from the central bank’s quantitative easing policy.
US Interest Rates stay on hold
The Federal Reserve has decided to keep US interest rates on hold at between 0% and 0.25%, as had been widely expected. Despite continuing signs that the US economy is recovering, the central bank reiterated that rates would stay at the low level for an “extended period”.
With inflation continuing to be low, the Fed is not under pressure to increase interest rates as a means to tackle any inflationary pressure. Instead, it can keep the cost of borrowing low to help the US economy continue to rebound.
Separate official US figures on Wednesday indicated that the economic recovery remains on track. This would normally strengthen the US Dollar, but in the current climate of the USD being a safe haven currency, good news from the states spurs investment into other currencies, benefiting Sterling, and may cause GBP/USD rates to fall.
UK – Retail Sales
Can – Consumer Price Index
US – Jobless Claims
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