UK Jobless Claims Fall by Most Since June 2010; Pound Remains Relatively Unchanged
UK jobless claims fell unexpectedly in February by the most since June 2010 adding to signs that the economy is overcoming the slowdown after the worst winter weather in a century. Claims dropped 10.2k from January to 1.45 million, the lowest level since February 2009, according to the Office for National Statistics (ONS), the result was better than consensus forecasts for an increase of 1.3k. The claimant count rate remained unchanged at 4.5% and average weekly earnings rose 2.3% more than the 2.1% forecast, which is ominous news on the inflation front.
After manufacturing and services PMIs showed earlier in the month that growth continued at a healthy pace in the UK as the winter freeze which caused the economy to contract in Q4 2010. As a result demand for private sector workers is soaring as companies look to add workers to keep up with growing demand. This should serve to offset, to a degree, the expected 330,000 public-sector job cuts that are expected as part of the government’s budget cuts.
The pound caught some bids against the buck on the buck of the release but remained well within this morning’s ranges as investor focus remains on Japan and the turmoil in MENA. A such, Gbp/Usd trades this morning in a quiet consolidation after yesterday’s choppy price action. Looking to the downside potential the pair should find support around the 1.6000 psychological level, a break of which opens a move back toward 1.5800. While to the upside, 1.6300 remains a topside cap after failing in the opening days of March to establish itself above the level. However, as focus remains elsewhere the pair may continue to move in this loose 1.60-1.63 range as it has done for the last 6-weeks or so.
Written by Jonathan Granby, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.