Another Round of British QE is Closer as Unemployment

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The unemployment rate in the UK rose to 8.4% in November. This was a bit higher than the 8.3% estimated earlier, a number recorded also in October. 

After a drop in inflation reported yesterday, the chances that the Bank of England will further expand its QE program in the upcoming meeting in February are on the rise.

A more recent employment figure is the Claimant Count Change, or jobless claims. The number of claims rose by 1200 – still rising, but at a lower pace. Early expectations stood on a rise 9.1K.

Also last month’s rise was actually lower than expected: only a gain of 0.2K. The original report stood on +3K. The related Average Earnings Index is rising at a pace of 1.9%, lower than 2% that was expected.

All in all, the employment situation in the UK remains dire. Yesterday, the UK reported that inflation was finally dropping – the year-over-year figure was 4.2% in December. This will likely be lower in January.

With lower inflation and higher unemployment, all is set for another raise in the Asset Purchase Facility, or pound printing presses. The current expansion of 75 billion pounds is expected to run its course through January.

So, February is the perfect timing for another expansion, which will likely be similar: another 75 billion pounds of bond buying, raising the total figure to 350 billion pounds.

GBP/USD is steady around 1.5350. For more on the pounds, see the GBP/USD forecast.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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