By Claire West
Data from the UK labour market this week provided few surprises, registering a narrow drop in the overall rate of unemployment.
Having held at 7.8% for the past three months, the rate dropped to 7.7% in September. However, offsetting this figure the claimant count for the past month was marginally higher than the market had forecast at 5,300, maintaining its steady upward trend.
With the markets squarely focused on central bank policy at present, the data has had little impact on the currency market with sterling holding near its pre-release levels.
Duncan Higgins, senior analyst at Caxton FX says, “Amid the more prominent theme of central bank policy, the figures have had little impact on the market. Sterling’s direction is being led by the question mark over QE and today’s unemployment figures won’t be cause for any shift in sentiment among the BoE policymakers.”
Although the slight drop in unemployment is a certainly a positive, it’s unfortunately immaterial, from the market’s perspective, given the spending cuts up ahead.
“With the government due to cull significant public sector numbers, the private sector will be lent on to provide the additional employment. But amid tough austerity measures, employers are not going to be rushing to recruit, and indeed the opposite could put the unemployment rate back up to 8.0% early next year,” concludes Higgins.
Following some encouraging figures from the eurozone, sterling has dropped towards its intra-day low against the euro around 1.1330. Against the dollar, the pound is currently consolidating its position at $1.5850.