News Column

Pound Mixed After UK Jobless Rate Rate

July 16, 2014



BRUSSELS (Alliance News) - The British currency showed mixed trading against the other major currencies in the European session on Wednesday, after the release of UK jobless rate in three months through May.

The Office for National Statistics reported that the UK unemployment rate continued to decline in three months to May.The jobless rate came in at 6.5% of workforce, as expected, for March to May, the lowest since October to December 2008.

During March to May, there were 2.12 million unemployed, 121,000 fewer than for December to February.

The claimant count fell to 3.1% in June, the lowest since September 2008, from 3.2% in May. The rate matched economists' expectations.

At the same time, the number of people claiming Jobseeker's Allowance declined by 36,300 on month, when it was forecast to drop by 27,000.

The pound fell to 1.7111 against the US dollar, from an early high of 1.7150 and held steady thereafter. At yesterday's close, the pound was trading at 1.7140.

The Federal Reserve Bank of Kansas City President Esther George said that a gradual increase in short-term interest rates will serve the economy well. The economy has been steadily improving post the crisis in the past five years, however, the rate of recovery still remains weak, she said.

Pulling away from an early high of 174.41 against the yen, the pound slipped to 173.97 and held steady thereafter. The pair closed yesterday's deals at 174.28.

The Bank of Japan said in its monthly report that Japan's output gap turned positive in the first quarter for the first time since 2008 raising inflationary pressure. According to BoJ, the gauge rose 0.6% during January to March, the first positive balance in about six years.

Against the Swiss franc, the pound rose back to 1.5382, from an early low of 1.5348 . The pound is thus heading to breach its early 2-year high of 1.5385. The pair was quoted at 1.5352 at yesterday's close. The pound may find resistance near the 1.54 region.

The Centre for European Economic Research, or ZEW, along with Credit Suisse showed that Switzerland's economic expectations declined notably in July.The ZEW-CS indicator, a measure of future economic expectations among market experts for next six months, came in at a nearly balanced level of 0.1 in July, declining sharply from the 4.8 score in June.

The pound rose back to 0.7901 against the euro, from an early low of 0.7917. The pound is thus heading to pierce its early near 2-year high of 0.7898. If the pound extends its uptrend, it is likely to find resistance around the 0.77 region.

Eurostat reported that the euro area trade surplus increased marginally in May after exports and imports recovered from April. The trade surplus increased to a seasonally adjusted EUR 15.3 billion from EUR 15.2 billion in April. On an unadjusted basis, the surplus remained at EUR 15.4 billion.

Looking ahead, US PPI for June, industrial production for June and NAHB's housing market index for July are set to be released in the New York session.

Federal Reserve Chair Janet Yellen will testify before the House Financial Services Committee at 10:00 am ET.

At 2:00 pm ET, US Federal Reserve Beige Book is due.



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Source: Alliance News


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