Why Aren’t Good Job Figures Helping Sterling in the UK?

Surprisingly Good Jobless Figures in the UK did Little To Help Sterling as Mervyn King Made His Move on QE

 Jobless claims came in better than expectations with the all time highest number of people in jobs in the UK. This now means that 29.73 million people are employed in the UK, which coincided with benefits claims falling at a higher rate than expected. This figure should suggest that the UK economy is growing at a comfortable rate, however this appears not to be the case.

 Minutes from the previous MPC meeting show that members voted for interest rates to stay on hold, although Mervyn King and 2 other voters placed their opinion behind a further expansion to the QE programme. This comes as the UK economy remains fragile and expectations for growth or a recovery remain challenged and prolonged. It is interesting to note that Mervyn King was amongst those who supported further QE, which saw sterling lose value across most markets. Analysts continue to point to sterling weakness which may increase exports but will maintain inflationary pressure.

The GBP decline accelerates as supports are breached.

Euro/USD: With early rally attempts being restricted by resistance in 1.3434 area the Euro came under renewed downward pressure as the day progressed. Once support in the 1.3405 zone gave-way this retreat gathered pace and the market made lows of 1.3362 before renewed demand was stimulated. The European session finally closed in and around the 1.3381 region.

GBP/USD: The GBP consolidated initially around the opening levels of 1.5436 although this only lasted until mid-morning when values broke sharply to the downside. This saw values accelerate to a low point of 1.5281 where the trend flattened out once again and prices finally closed around the 1.5290 region.

Euro/JPY: With this pairing firmly trapped within a fresh trading range values experienced yet a further choppy consolidation pattern today. Initial rally attempts met stiff resistance at 12591 and the Euro slipped back towards 12495 where support re-emerged and prices finally closed in and around the 12530 zone.

GBP/Euro: The GBP continued its downward cycle today and after a brief period of consolidation around the opening levels of 1.1504 prices fell away sharply with little support being uncovered until the 1.1407 zone. These losses were then digested through fresh consolidation during the balance of the day with the market finally closing in the 1.1430 region.

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