Sterling up after BoE Report and Unemployment Data

Wednesday 13th November 2013 
The Pound has had a topsy turvy week so far. Yesterday we had some inflation data that weakened the Sterling, pulling exchange rates down from the highs we saw at the end of last week. The dip was temporary however, as today we have had some better than expected Unemployment figures, along with a positive report from the Bank of England that has pushed the Pound higher. 

UK Unemployment & The Bank of England Report

Figures released this morning by the Office for National Statistics show that the number of unemployed people in the UK fell by 48,000 to 2.47 million between July and September. The unemployment rate fell to 7.6%, the lowest rate in more than three years. 

The figures will be taken as an indication that the UK economy, which grew 0.8% in the third quarter, is continuing to recover. The news gave the Pound a boost, and caused exchange rates to rise slightly. 

This was followed at 10.30am this morning by the Bank of England Quarterly inflation report. Bank of England governor Mark Carney says the UK recovery has “taken hold” and unemployment will fall sooner than it had forecast. 

The report said: “In the United Kingdom, recovery has finally taken hold. The economy is growing robustly as lifting uncertainty and thawing credit conditions start to unlock pent-up demand.” 

This compounded the strength for Sterling and pushed rates higher still. As you can see from the chart below, it’s clear the immediate effect the data releases had on exchange rates, with Pound/Euro rates now settled just below €1.19. 

Tomorrow is another key day for GBP/EUR rates 

After lots of UK data so far this week, tomorrow it’s Europe’s turn. We have preliminary GDP figures for Germany, France and Italy showing if their economies are growing. We also have a monthly statement from the European Central Bank. Also of importance will be the UK’s Retail Sales numbers at 09.30am, as these are a good indicator of economic activity as a whole. 

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Alastair Archbold

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