GBP Gets UK Employment and BoE Economic Conditions Boost

The pound climbed from a one-week low as a report showed the U.K. unemployment rate fell below 5 percent for the first time since 2005.
Sterling was further boosted by a Bank of England survey which showed that despite an increase in business uncertainty after the June 23 referendum where the U.K. voted to leave the European Union, firms sought to maintain “business as usual.”

The British currency gained versus all of its 16 major peers as data showed the U.K. jobless rate, as measured by International Labour Organisation standards, dropped to 4.9 percent in the three months through May. The median forecast in a Bloomberg survey of economists was for an unchanged reading of 5 percent. Separate wage data showed average weekly earnings unexpectedly fell.

“It’s a double push really for the pound,” said Neil Jones, London-based head of hedge-fund sales at Mizuho Bank Ltd. “We have got insight into the thinking of businesses and it looks like the hiring plans” are not expected to change “for the moment, so we can probably maintain some healthy levels of employment.”

The pound rose 0.3 percent to $1.3154 as of 2:26 p.m. London time, after falling earlier to $1.3065, the lowest since July 12. Sterling strengthened 0.5 percent to 83.61 pence per euro.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza