Pound vs dollar rate today: British pound on the offensive since biggest decline in the claimant count since 1997

UK Labor data showed the biggest decline in the claimant count since 1997 pushing the pound vs dollar exchange rate through the 1.6000 mark.

However, the rally stalled ahead of the 1.6050 level after investors were slightly disappointed by lack of improvement in the ILO rate.

(NB: Please be aware that all quotes here are from the wholesale markets, 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.)

"Cable was the primary focus of the early morning European trade rising nearly 100 points off the session lows as currency markets responded to the sharp improvement in the claimant count data which declined by -41K versus -24K eyed. This was the best reading in 12 years and the twelfth consecutive monthly reduction in jobless rolls in UK," says a note from Boris Schlossberg at BK Asset Management on the matter.

The decline in joblessness however did not immediately translate into an improvement in the ILO unemployment rate which remained at 7.7% matching last month's reading.

"Nevertheless, the drop in claimant count will likely lead to further reduction in the unemployment rate over the next several months and that should prove supportive for the pound given the fact that the BoE has tied its forward guidance on rates to unemployment figures," says Schlossberg.

Another minor disappointment in today's UK labor numbers was the smaller than expected rise in Average hourly earnings which increased only 0.7% versus 1.0% eyed.

Given the persistently sticky inflation rates of 2.5% or higher, UK workers are actually seeing negative income growth for now and that may temper spending going forward. Tomorrow's UK Retail Sales data should provide an interesting glimpse into the strength of consumer demand.

"In the meantime, cable remained bid above the 1.6000 level by mid-morning London trade and the pair could see further relative strength as the day proceeds if the US debt ceiling crisis moves closer to resolution," says Schlossberg.