Pound Weakens As U.K. Employment Falls
November 15 2017 - 1:03AM
RTTF2
The pound declined against its major rivals in the early
European session on Wednesday, as the U.K. employment dropped
sequentially to more than a 2-year low in the third quarter. Data
from the Office for National Statistics showed that the number of
people in employment fell by 14,000 to 32.06 million on quarter in
the three months to September. This is the biggest decline since
April to June 2015 quarter. Simultaneously, the number of
unemployed decreased by 182,000 from previous year to 1.42
million.
The ILO jobless rate held steady at 4.3 percent in three months
to September but down from 4.8 percent a year earlier. The rate
came in line with expectations.
Average weekly earnings for employees increased by 2.2 percent
both including and excluding bonuses, compared with a year
earlier.
Bank of England Deputy Governor Jon Cunliffe said it was
possible to wait for clear signs of pay growth picking up, before
tightening policy early this month.
"In my view, the low level of domestic pressure on inflation
now, the absence of second round effects from the depreciation of
sterling, and inflation expectations around their historical
averages, make it possible to wait before tightening policy until
there is clear evidence that pay growth is responding to the level
of unemployment in line with our forecast," Cunliffe said.
Falling equities also hammered the currency, as weak commodity
prices on concerns over Chinese growth kept investors nervous.
Market participants also looked ahead to a crucial vote on the
U.S. tax reform bill due Thursday for direction.
The currency showed mixed trading in the Asian session. While it
dropped against the yen and the franc, it rose against the
greenback. Against the euro, the currency held steady.
The pound fell to near a 4-week low of 0.9014 versus the euro,
after having advanced to 0.8955 at 5:00 pm ET. If the pound drops
further, 0.92 is likely seen as its next support level.
Data from Eurostat showed that the euro area trade surplus
increased in September from August as exports increased amid a fall
in imports.
Exports grew 1.1 percent month-on-month in September, while
imports decreased 1.2 percent.
The pound reversed from an early high of 1.3029 against the
franc, touching near a 4-week low of 1.2956. Continuation of the
pound's downtrend may see it challenging support around the 1.28
area.
The pound slipped to a 2-day low of 148.12 against the yen,
following an advance to 149.36 at 5:00 pm ET. On the downside,
147.00 is likely seen as the next support for the pound-yen
pair.
Figures from the Ministry of Economy, Trade and Industry showed
that Japan's industrial production declined less than initially
estimated in September.
Industrial production dropped a seasonally adjusted 1.0 percent
monthly in September instead of a 1.1 percent decrease reported
earlier. This was followed by a 2.0 percent rise in August.
The U.K. currency retreated to 1.3134 against the dollar,
following an immediate rise to a 5-day peak of 1.3214 after the
data. The next possible support for the pound-dollar pair is seen
around the 1.30 area.
Looking ahead, U.S. consumer prices and retail sales for
October, business inventories for September and New York Fed's
empire manufacturing for November as well as Canada existing home
sales for October are set for release in the New York session.
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