Can sterling extend the recovery? Today's employment figures will decide
Can the British pound sterling (Currency:GBP) continue to edge higher against the euro and other major currencies today? This question will be answered at 09:30 when the latest UK employment numbers are released. Analysts are tipping this month's figures to be more influential than recent releases; watch currency market volatility as a result. Meanwhile, the GBP/USD will be driven by events in the US once more, can yesterday's strong USD bounce continue?
Latest rates:
The pound to euro exchange rate is 0.17 pct in the red at 1.1815.
The pound to US dollar exchange rate is 0.2 pct lower at 1.5967.
The pound to Australian dollar rate is 0.1 pct lower at 1.6778.
The pound to New Zealand dollar is 0.47 pct lower at 1.9012.
NB: Please be aware that the above are spot market quotes to which your bank will affix their own discretionary spread. Please note, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.
15:23: US dollar in strong comeback on fresh US fiscal deal rumours
What a circus. The US dollar is back in fashion all of a sudden.
Ishaq Siddiqi at ETX Capital explains why:
"Robert Costa from the National Review reports that Boehner has agreed to take up a Senate plan to end the fiscal stalemate in Washington and allow it to pass with support from the Democrats. That being said, these are reports, yet to be confirmed by lawmakers! Already, a House Republican aide has said leaders haven’t decided just yet, but a last minute deal does look to be more forthcoming than previous. Another Republican however said he believes that Senate will pass the agreement to the House."
14:56: When to back the British pound?
Matt Weller at GFT discusses the possibility of buying the British pound against the US dollar:
"Like its mainland cousin, the GBP/USD also rallied strongly in today’s early European session trade, bolstered by the strongest jobs report in 12 years. From a price action perspective, the pair broke through key previous resistance around 1.6000, opening the door for a continuation up toward 1.6100 next.
"However, with the pair already trading in the mid-1.6000s as we go to press, it may be more prudent to wait for a pullback toward the previous breakout level at 1.6000 to enter new buy trades."
13:33: Don't give up on sterling yet!
In light of the below comment, Sean Lee at FXWW says he is still backing the pound against the euro:
"This pair is less likely to be affected by any debt-deal silliness so we can start paying attention to the technical picture. The 5-wave down-move from .8770 to .8330 has retraced by 38.2% to .8500 and has now put in a daily top at this level. Selling any intraday rallies towards this level with stops tight above makes good risk-reward sense."
13:28: Euro in afternoon comeback, US dollar lower
The pound is sharply lower against the euro and up against the US dollar in early afternoon trade in London.
Why is the euro stronger, and why is the dollar lower? No reason in particular.
11:45: CBI welcomes fall in long-term unemployment
According to today's employment data, employment rose by 155,000 and unemployment fell by 18,000 in the three months to August.
Drilling through today's employment figures reveals some long-term positives. As Neil Carberry, the CBI’s Director of Employment and Skills points out:
"Today’s figures suggest that the more positive economic outlook is beginning to flow through to the jobs market. However, overall unemployment remains high.
"It is really encouraging that today’s increase in employment is almost entirely driven by a rise in full-time work and that long-term unemployment has begun to drop.
"However, it is clear that pay restraint is underpinning employment growth so we must ensure that minimum wage policy continues to reflect the wider labour market to ensure people aren’t priced out of opportunities to work."
10:36: Bank won't give up on stimulus
It seems that the Bank of England remains concerned by events in the US and its impact on the global economy.
Spencer Dale says that BOE is to maintain "highly stimulatory policy stance".
10:02: Bank of England's Dale now speaking
The Bank of England's Spencer Dale is currently speaking, he says the Bank will keep rates low until the economy is growing sustainably.
We will watch out for any eyebrow raising comments.
09:30: Employment data beats expectations, but Brit's just aren't earning more
Claimant Count Change (Sep): Beat expectations in comfortable fashion by reading -41.7K. Consensus forecasts at -25.0K, previous month read at -32.6K.
ILO Unemployment Rate (3M) (Aug): Comes in at 7.7%. Forecasts were for 7%, unchanged on last month at 7%.
Average Earnings including Bonus (3Mo/Yr) (Aug): Came in at 0.7%, consensus expected +1%. Last month read at 1.1%.
Average Earnings excluding Bonus (3Mo/Yr) (Aug): Read at 0.8%, consensus was at +1%, previous @ +1%.
09:09: Lloyds see scope for further GBP gains
"GBP/USD traded well yesterday after testing support at 1.5915, and strong numbers today suggest scope for a sharper move back above 1.60. EUR/GBP should also have downside potential, with the 0.85 area likely to prove a medium term top if the data today proves favourable, with the recent 0.8330 low a medium term target." - Lloyds Bank Research.
08:34: Employment figures are today's key economic release
Wednesday is all about employment data; remember the Bank of England is targeting an unemployment rate at 7% before they consider tightening monetary policy, thus any improvements in the UK employment situation could hasten the tightening, a pro-GBP outcome.
Claimant Count Change (Sep) is predicted to come in at -25K, i.e 25 less people receiving unemployment benefit.
Last month the figure fell by 32.6K.
The headline ILO Unemployment Rate (3M) (Aug) rate is predicted to remain at 7.7%.
08:18: Predicting an upside surprise for sterling
Kathy Lien at BK Asset Management says she expects the British pound to benefit from today's data:
"While hotter inflation is a key component in the BoE's decision, this week's employment and retail sales report should be even more important. The number of people filing for unemployment claims is expected to drop by a smaller amount in September versus August with average weekly earnings growth easing slightly. We believe there's scope for an upside surprise because the PMI reports show improvements in labor market conditions."
08:15: CPI figures rescue the GBP
Welcome to Wednesday the 16th's coverage of the British pound sterling (Currency:GBP).
Yesterday we saw the British pound register gains against the euro and U.S. dollar on the back of hotter consumer prices. CPI grew 0.4% in the month of September and this increased kept annualised CPI growth at 2.7%.
Can today's labour market data cement and even extend these gains?