A rise in the number of unemployed people was reported at he fresh Claimant Count Change release. This disappointment makes GBP/USD more vulnerable than other currencies.
Britain’s earliest report on the job market disappointed – instead of a decrease of 4300 unemployed people, Britain “gained” 2300 new ones. Also last month’s figure was revised to the downside. The unemployment rate remained at 7.8% as expected, but this is a rather “old’ figure – relates to July. This undermines the Pound:
GBP/USD fell from 1.5520 to 1.5480 immediately after the release, and is now struggling around 1.55. Further levels below: 1.5350, 1.5230 and 1.5120. Above – 1.5720, 1.5833 and 1.60.
The Pound had two chances of rising yesterday, but the gains were limited – CPI came out stronger than expected, at 3.1% and didn’t slip back to the 1-3% government target. While this theoretically raises the chances of a rate hike, Britain’s vulnerable position will probably deter policymakers from acting. The Pound’s gains were limited.
Later yesterday, a bigger event rocked the markets – Goldman Sachs reiterated its prediction that the Federal Reserve will have to print one more trillion dollars in order to boost the economy. EUR/USD rose above 1.30, AUD/USD reached a two year high, th Swiss Franc became stronger than the dollar, and other currencies rocked as well.
The British Pound also gained, but the gains were limited.
Later today, Mervyn King will speak at the Trades Union Congress, in Manchester. The governor of the BoE usually brings the Pound down by expressing concern about the economy and/or dismissing inflation.
With these weak unemployment figures, the Pound is vulnerable to King’s words.
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