Forex: EUR/GBP dips on UK unemployment falling to 7.1%

on Jan 22, 2014
Updated: Oct 21, 2019
Listen Wednesday, January 22nd:_ The UK Office for National Statistics (ONS) today released highly positive labour market data which caused the pound to strengthen and the EUR/GBP to fall 0.46 percent to its lowest point since 10 January last year at 0.8179. After a slight rebound, the pair is currently trading at 0.8188.

Total unemployed dropped by 167,000 to 2.32 million and the unemployment rate fell to 7.1 percent in the three months to November from the prior quarter’s 7.4, approaching the 7.0 percent threshold at which the Bank of England has said it would consider a rise in interest rates. Analysts were caught out, having expected the unemployment rate to fall to 7.3 percent.

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The quarter’s jobless drop was the largest since the same period in 1997, with unemployment among 16-24 year olds down 39,000 on the previous quarter to 920,000.
The number of people in work rose for a third straight month, by 280,000 to reach 30.15 million.
And the Claimant Count, measuring applications for unemployment benefit, fell by 24,000 in December, fewer than the expected 34,000.

The bullish labour market numbers are now raising the possibility that BoE interest rates will be hiked sooner than previously expected.
Commenting on the “staggeringly strong” figures, BNP Paribas’ David Tinsley writes that “especially pleasing is that the fall in unemployment is coming both from declining short and long-term unemployment, and a large decline in unemployment amongst 16-24 year olds”.

UK Minister of State for Employment Esther McVey said in a statement following the release: “Creating jobs and getting people into employment are central to our economic plan to build a stronger, more competitive economy, so it is very encouraging news that we’ve seen a record-breaking rise in employment over the last three months.”

However, the minutes from this month’s meeting of the BoE’s Monetary Policy Committee, also released today, show that the Bank is in no hurry to raise interest rates, given that inflation returned to the two percent target last month and that “cost pressures were subdued”.
Italy’s Current Account has been reported today as a €2.828 billion surplus in November, down from October’s €4.022 billion.
Resistances today: 0.8190, 0.8210 and 0.8230.
Supports: 0.8170, 0.8150 and 0.8100.


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