The Pound Will Not Rise without Orders from King


The number of unemployed people fell again in Britain, quite impressively. This doesn’t seem enough for the Pound. The key is in the hands of Mervyn King, which sees the dark side of the economy.

Claimant Count Change, the earliest and most important indicator for British employment, fell by 15,200 jobs in December. This is the second month in a row that the number of unemployed people drop in Britain. Also the Unemployment Rate, a figure that relates to November, dropped back to 7.8%.

The big turnaround was last month when it was reported that 6,300 were relived of unemployment. This number was revised to 10,800 this time – even better. And now, a drop of 3,300 people was predicted, and the number was almost 5 times more. This looks like a positive trend in British employment.

But the Pound didn’t budge. It initially rose from 1.63 to 1.6325, no big excitement, and afterwards fell back to 1.6295, at the time of writing. Also against the Euro, the Sterling didn’t move after yesterday’s sharp EUR/GBP move.

Yesterday we saw rising inflation in Britain, and today another strong improvement in employment. Both key figures mean stronger economic activity. This should eventually trigger a rate hike. A rate hike will push the Pound higher.

Despite these numbers, no rate hike is in the horizon. Mervyn King made a public appearance yesterday and cooled down such expectations. He said there’s no danger of inflation and focused on the problems of the economy, especially on the big government deficit:

King also suggested that the bank’s task is complicated by doubt on how fast the next government will cut the budget shortfall. Chancellor of the Exchequer Alistair Darling told lawmakers last month Britain’s budget deficit will be 611 billion pounds ($994 billion) in the four years through March 2013, 5 billion pounds more than previously forecast.

His speech hurt the Pound immediately, and has an impact today, as strong employment numbers can’t support a rise of the currency.

Get the 5 most predictable currency pairs

About Author

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 a 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.


  1. Pingback: Gbp Under Orders From King | Forex Chaser

  2. Pingback: Forex Daily Outlook – January 21st 2010 | Forex Crunch

  3. Pingback: Forex Daily Outlook – January 22nd 2010 | Forex Crunch

  4. Pingback: Forex Daily Outlook – The Dollar is Sweeping the Board

  5. Pingback: Forex Weekly Outlook – January 25-29 | Forex Crunch

  6. Pingback: GBP/USD Outlook – January 25-29 | Forex Crunch

  7. Pingback: Forex Weekly Outlook – February 1-5 2010 | Forex Crunch

  8. Pingback: Forex Weekly Outlook – February 15-19 | Forex Crunch

  9. Pingback: Forex Daily Outlook – February 16th 2010 | Forex Crunch

  10. Pingback: GBP/USD – Trend lines on a Collision Course | Forex Crunch

  11. Pingback: Forex: U.S. Economy Improves and British Inflation Jumps

  12. I dont understand why mervyn king does not put interest rate up and help pensioners who are living abroad and are losing a lot of money due to currency. I am not a conservative but many people wont vote labour because of the Economy and the currency I think the labour party have damaged the country

  13. Pingback: GBP/USD Outlook – February 22-26 | Forex Crunch

  14. Pingback: The King Wants and Gets a Weak Pound | Forex Crunch

  15. Pingback: GBP/USD Outlook – March 22-26 | Forex Crunch

  16. Pingback: Forex Daily Outlook – March 23rd 2010 | Forex Crunch

  17. Pingback: Forex: Focus on British Inflation Figures and U.S. Existing Home Sales

  18. Pingback: GBP/USD Picking Up On Inflation | Forex Crunch

  19. Pingback: Forex Weekly Outlook – June 7-11 | Forex Crunch

  20. Pingback: The Pound rises by orders from the King | Forex Crunch