Forex »

British pound soars on job data, BOE report

Finances
Share on StockTwits
Published on
www.finances.com
British pound soars on job data, BOE report

The British pound rebounded strongly, gaining more than 100 pips against its US counterpart, after UK employment data shifted the Bank of England’s forward guidance on interest rates.

Claims for unemployment benefits in the UK fell 41,700, more than the 35,000 forecasted by economists. Employers added 177,000 payrolls between July and September, shifting the employment rate for workers aged 16 to 64 to 71.8 percent. This helped push the unemployment rate down to 7.6 percent for the three months up to September, the lowest since 2009.

The Bank of England responded to the data by bringing forward its rate guidance. The central bank now expects the unemployment rate to hit its target of 7 percent in the third quarter of 2015, almost one year earlier than previous forecasts. The news helped propel the British pound after falling in the previous session on the heels of slower CPI growth.

The pound rallied to a high of 1.6046 US in the North American session, before consolidating at 1.6017—a gain of 113 pips. The GBPUSD fell below 1.60 last week after US employment growth exceeded forecasts. US mortgage applications fell half a percent last week, according to the Mortgage Bankers Association, as fewer Americans sought mortgage approvals.

The euro fell 50 pips against the British pound, sending the EURGBP to 0.8397, after hitting a session low of 0.8382. Momentum in the euro area waned after the European Central Bank unexpectedly slashed interest rates last week. The euro remains under pressure as market participants speculate whether the ECB will pursue more drastic measures to stimulate the economy. Official third quarter GDP estimates for Germany and the broader euro area make headlines Thursday.

The British pound has been well bid for most of the year, as economic momentum continues to build in the UK. The pound has entered into another bullish phase in the short-term, and should continue to receive support so long as the economy continues to accelerate. The BOE expects the UK economy to expand 1.6 percent this year and 2.8 percent next year, according to a revised forecast.

Share on StockTwits

What others are reading on Finances

Sorry. No data so far.


Iron FX 1.11156/1.11128 2.8
XM Markets 1.09948/1.09928 2
FxPro 1.10184/1.10171 1.3
FXCM 1.13943/1.13912 3.1