UK labor printed better than expected sending pound through the 1.6150 level in early London trade as both claimant count and unemployment improved. The claimant count fell ny -4K vs. 0K eyed dropping for the third month in a row, while the unemployment rate declined to 7.9% – it lowest level since June 2011.
The better than anticipated labor numbers suggest that UK economic growth may be picking up after recording two consecutive quarters of contraction. The news should allay fears that UK economy may continue to contract into the year end, as the ILO jobless rate has now shown a fall of 50,000 unemployed over the past three months.
In other UK economic news the MPC released its minutes of the last BOE meeting which revealed some â€œdifferences of viewâ€ as to whether further loosening of monetary policy would be needed including questions about itâ€™s effectiveness. Overall however the committee voted 9-0-0 to keep rates at current 50bp level and to maintain the 375GBP Billion QE program in place.
The BOE saw some encouraging signs in the improving mortgage market but noted that there was little change over the past month in the balance of medium term growth and inflation risks suggesting that the UK central bank will maintain its current posture for the time being.
Overall the surprisingly strong economic data should prove supportive for the pound in todayâ€™s trade. The pair has been a laggard in this weekâ€™s rally in risk as investment sentiment towards the unit has been decidedly guarded . However, if equities remain well bid in the North American session sterling could make a run towards the key 1.6100 level as the day proceeds.