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GBP/USD Pulls Ahead on Strong Jobs Report

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GBP/USD Pulls Ahead on Strong Jobs Report

The British pound soared more than 100 pips versus the US dollar, as strong employment data continued to boost optimism in UK recovery.

Jobless claims in the UK fell 24,000 in December, official data from the Office for National Statistics showed today. The ILO unemployment rate in the three months through November fell from 7.4 percent to 7.1 percent.

Employment levels in the three months through November increased 280,000, an all-time record. The employment rate for workers aged 16 to 65 increased 0.5 percentage points to 72.1 percent over the same period.

The GBPUSD pair rose for the second consecutive session, overcoming two resistances (1.6525 and 1.6566) on its way to 1.6574. The pound has reclaimed more than 1.3 percent of its value against the US dollar over the previous five sessions. The US dollar has been sidelined for most of the week, as a dearth of economic data has kept forex traders preoccupied with Europe.

Meanwhile, Sterling extended its winning streak to three days versus the euro, soaring to a one-year high. The EURGBP cross plummeted 44 pips to 0.8186. Technical support is now at 0.8180.

The Monetary Policy Committee unanimously voted to keep interest rates at record lows. With inflation falling and average earnings gradually on the rise, the UK economy will look to stabilize in 2014. However, wages are currently rising at half the rate of inflation, indicating it may be a while before the economy hits full stride. Average earnings excluding bonus rose 0.9 percent in the three months through November, up from 0.8 percent.

The Bank of England’s official bank rate has been at 0.5 percent since March 5, 2009.

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