Sterling continues to edge lower in the wake of this morning’s UK unemployment figures announcement, reports foreign exchange (FX) specialist Caxton FX. Recently released data showed another confused picture of the UK labour market, as the number of people claiming unemployment benefit actually rose in March, running against expectations for a modest decline. However, the UK unemployment rate has actually dropped to 7.8%, its lowest level since November last year.
Richard Driver, currency analyst at Caxton FX, said: “The market’s response has been fairly muted given the absence of clarity within this morning’s figures, but sterling has continued in its recent decline.”
The outlook for sterling hasn’t improved either, added Driver: “Sentiment towards the UK economy is such that only a run of very positive figures is likely to trigger any significant gains for sterling – a turnaround in fortunes still appears to be a distant notion.
“A fourth MPC [Monetary Policy Committee] vote in favour of a UK rate rise, should it be revealed in next week’s minutes, would certainly offer some much needed support for the pound – but such an outcome appears unlikely. Beyond this, and perhaps more significantly, a positive first quarter GDP [gross domestic product] estimate due on 27 April will be required to slow sterling’s downtrend. A strong figure may be sufficient to convince the MPC that the UK economy is nearing a position where it can withstand tighter monetary policy,” he said.
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