Sterling up on the back of strong labour figures
The market remained pretty uninspired by Bernanke’s speech yesterday afternoon as he simply reiterated his intention to reduce stimulus in the foreseeable. We did see the dollar weaken a little and may see a little more volatility this afternoon when he testifies before Congress.
The UK labour market figures added to signs the economy is gaining momentum with a sharp fall in jobless claims coupled with an increase in wage growth. The claimant count of unemployment fell by 21,200 in June which was better than the expected figure of 8,000. According to the ILO wider measure, the number of people unemployed fell by 57k to 2.51m in the three months to May.
The new governor Mark Carney seems to be getting his feet under the table with reported success in bringing unity at his first MPC meeting. The committee voted unanimously to leave the QE programme and interest rates unchanged. The minutes reveal all members agree in not wanting a premature policy tightening,
The positive UK labour data plus the MPC’s unanimous vote helped Sterling find support. GBP/USD rose over one cent to a high of $1.5267 while GBP/EUR pushed back above the €1.16 level for a while.