16 Oct 2013
GBP/USD gains on UK jobless numbers are likely to be shortlived
FXstreet.com (London) - Sterling saw gains against the dollar this morning when jobless numbers printed lower than expected.
The figures, from the Office for National Statistics (ONS) showed that claims for unemployment benefit fell 41,700, beating consensus expectations and falling the most since June 1997.
The jobless rate as measured by International Labour Organisation (ILO) standards remained unchanged at 7.7 percent in the third quarter.
The strengthening UK labour market is seen by some as an indication that the Bank of England may move to raise interest rates earlier than its 2016 projections. Bank of England governor, Mark Carney has stated that the central bank will consider a rate hike when unemployment dips below 7 percent.
Though the numbers have produced a jump in GBP/USD to one-week highs at USD1.6038, gains are likely to be short-lived, with bets on a hawkish revision to BoE projections somewhat premature.
In addition, sterling has been given a relative boost against the dollar as Congress remains without a workable bill to end the government shutdown and extend the debt ceiling. With pressure mounting as the US approaches its soft deadline at midnight tonight, and breakthrough would trigger a dollar surge, undoing recent sterling gains.
The figures, from the Office for National Statistics (ONS) showed that claims for unemployment benefit fell 41,700, beating consensus expectations and falling the most since June 1997.
The jobless rate as measured by International Labour Organisation (ILO) standards remained unchanged at 7.7 percent in the third quarter.
The strengthening UK labour market is seen by some as an indication that the Bank of England may move to raise interest rates earlier than its 2016 projections. Bank of England governor, Mark Carney has stated that the central bank will consider a rate hike when unemployment dips below 7 percent.
Though the numbers have produced a jump in GBP/USD to one-week highs at USD1.6038, gains are likely to be short-lived, with bets on a hawkish revision to BoE projections somewhat premature.
In addition, sterling has been given a relative boost against the dollar as Congress remains without a workable bill to end the government shutdown and extend the debt ceiling. With pressure mounting as the US approaches its soft deadline at midnight tonight, and breakthrough would trigger a dollar surge, undoing recent sterling gains.