Positive Turnaround in UK Unemployment Sparks Surge in Sterling
THE TAKEAWAY: UK unemployment comes in better than expected -> Signs of a stabilizing economy support PM’s budget deficit cuts -> Sterling gains against dollar and euro
UK unemployment dropped for the first time in almost a year, to 8.3% on the month, beating analysts’ expectations for an unchanged rate of 8.4%. Jobless-benefits claims rose by 3,600 during the month of March to a total of 1.61 million; but the rise in claims was much lower than analysts’ expectations of a monthly gain of 6 thousand.
The unemployment rate was measured by the International Labour Organization and the jobless claims were provided by the Office of National Statistics.
The better than expected unemployment rates can be seen as a sign of a stabilizing economy, and the data support Prime Minister David Cameron’s attempt to cut the budget deficit.
Cable jumped on news of the positive jobs reports and the simultaneous Bank of England minutes release that signaled a smaller chance of raising quantitative easing. The pair made new weekly highs by crossing the 1.5900 mark and come closer to the resistance level 1.6061. Sterling also rose sharply against the Euro following the data release.
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