Pound Strengthens After UK Claimant Count, BoE Minutes

Pound Strengthens After UK Claimant Count, BoE Minutes


The pound edged higher in early deals Wednesday after data showed that the unemployment rate in the U.K. declined unexpectedly and the Bank of England policymakers were unanimous in deciding to maintain quantitative easing and interest rate.
Latest figures from the Office for National Statistics showed that the jobless rate fell to 7.9 percent in the June-August period from 8.1 percent during March-May. Economists expected the rate to remain unchanged from the previous period.
The claimant count or jobless claims fell by 4,000 from a month earlier to 1.57 million in September. Expectations were for no change in the number of people claiming the job seeker's allowance. The claimant count rate remained unchanged at 4.8 percent as expected.
Bank of England policymakers unanimously decided to maintain quantitative easing at GBP 375 billion and the interest rate unchanged at 0.50 percent, the minutes of the meeting showed Wednesday. The meeting was held on October 3 and 4.
The nine-member MPC discussed whether it was appropriate to modify or continue with the programme of asset purchases that it had agreed at its July meeting. Also, they discussed the likely effectiveness of further asset purchases, should they be required.
The market focus will once again be shifted to the eurozone developments as a two-day summit of the European Union heads of States and Governments is set to begin in Brussels on Thursday, with discussions focusing on the Economic and Monetary Union.
The pound rose back above the 1.6150 level against the US dollar for the first time in 12-days, rising as much as 1.6159 after the job data. Last month's reversal from the key 1.63 supply level for the cable has not attained a proper path towards major support levels and the pair may re-test 1.62 and 1.63 resistance levels again.
Reversing from Asian session's fresh 4-month low of 0.8140 against the euro, the pound advanced to 0.8110 around 5:05 am ET. However, the pound is still under selling pressure against the euro as the pair is moving in a strong upward channel.
The European shared currency rose in the morning after the rating agency Moody's Investors Service left its Spanish sovereign rating unchanged at investment grade, but with a 'negative' outlook. Reports showed the Spanish government is inching closer to officially request a European bailout also lifted the high-yielding euro in the morning.
The British sterling inched up to session's highs of 1.4925 against the Swiss franc and 127.32 against the yen immediately after the UK data. The near-term resistance levels are visible for the British unit at 127.80 against the yen and 1.50 against the Swiss franc.
Looking ahead, the U.S. housing starts and building permits-both for September are the key economic data to watch in the North American session.