Pound Spikes Up As UK Unemployment Rate Remains At 44-year Low
June 11 2019 - 2:11AM
RTTF2
The pound drifted higher against its major counterparts in early
European deals on Monday, as a data showed that the UK unemployment
rate remained stable in April at the lowest since 1974 and
employment hit a record, pointing to continued strength in the
labor market.
Data from the Office for National Statistics showed that the ILO
jobless rate came in at 3.8 percent in three months to April, the
lowest since end of 1974. The rate came in line with
expectations.
At 76.1 percent, the employment rate was the joint-highest on
record. The number of people in employment increased 32,000 to a
record high of 32.75 million.
Average earnings, including bonuses, grew 3.1 percent
year-on-year in three months to April, slightly faster than the
expected 3 percent. Excluding bonuses, weekly earnings advanced 3.4
percent versus expected growth of 3.1 percent.
The U.K. economy is set to contract in the second quarter after
stockbuilding ahead of the original Brexit departure date boosted
growth in the first quarter, according to a report by the National
Institute of Economic and Social Research.
The think tank forecast a 0.2 percent contraction in GDP in the
second quarter.
The currency was also underpinned by risk appetite as hopes of
more stimulus for China's slowing economy helped offset lingering
worries about the U.S.-China tariff war.
The currency held steady against its major counterparts in the
Asian session, barring the yen.
The pound appreciated to 0.8893 against the euro, from near a
5-month low of 0.8932 touched at 3:15 am ET. The pair had ended
Monday's trading at 0.8917. Next key resistance for the pound is
seen around the 0.86 level.
Survey data from the behavioral research institute Sentix showed
that Eurozone investor confidence eroded sharply in June as a
renewed escalation in trade tensions between the US and China hurt
sentiment in the single currency bloc.
The investor confidence index for the euro area fell by 8 points
to -3.3 from +5.3 in May. Economists had expected a score of
+2.5.
After falling to 1.2670 against the greenback at 2:45 am ET, the
pound reversed direction and reached as high as 1.2724. The pound
is likely to find resistance around the 1.29 level.
The pound strengthened to 138.23 against the yen, following a
decline to 137.50 at 5:15 pm ET. The next possible resistance for
the pound is seen around the 140.00 level.
Data from the Bank of Japan showed that the M2 money stock in
Japan was up 2.7 percent on year in May, coming in at 1,029.8
trillion yen. That follows the downwardly revised 2.5 percent
increase in April.
The M3 money stock advanced an annual 2.3 percent to 1,361.7
trillion yen following the 2.2 percent gain in the previous
month.
The U.K. currency climbed to a 4-day high of 1.2616 against the
Swiss franc, reversing from a low of 1.2543 seen at 5:30 pm ET. The
pound is seen finding resistance around the 1.29 region.
Looking ahead, the U.S. producer prices for May are due in the
New York session.
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