Pound’s Value Declines against Dollar after UK Unemployment Data

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Pound’s Value Declines against Dollar after UK Unemployment Data
Pound’s Value Declines against Dollar after UK Unemployment Data

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ForexMinute.com – The pound’s value declined against the US Dollar after UK unemployment data showed an unexpected growth of 7.2% in the three months of December. At the start of the day, the GBP/USD currency pair was trading at 1.6725. But upon the announcement of UK jobs data, its values fell to 1.6681 – almost 0.04%.

The pair is likely to find support at 1.6610 and resistance at 1.6735.

The UK job data was a slightly higher than its early reading, which was 7.1% in the previous three months. Today’s data was a complete reverse of what most of the economists were expecting, which was a 7% decline in unemployment numbers. The expectations also inspired Bank of England’s committee members to keep interest rates low – 0.5 percent – and also to keep their bond buying programs unchanged.

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On Tuesday, we have discussed the US dollar’s little escalation against pound due to the Bank of England’s last week’s quarterly inflation report that indicated the fear of price hikes next year. A 2% drop in the inflation was also expected in the same report.

However, BOE has already forecasted their potential decisions on a rate hike. But Governor Carney had cleared that the change in rates would not solely depend on the unemployment numbers, and said the bank rates need to remain low until and unless the spare capacity in the economy has been absorbed further, which may not happen until 2015.

To contact the reporter of the story: Jonathan Millet at john@forexminute.com