An unexpected drop in unemployment helps the British pound recover after suffering earlier this week. No change was seen in the unemployment rate and in the MPC meeting minutes. GBP/USD broke minor resistance and is approaching a bigger barrier.
Claimant Count Change, which measures the number of people claiming for unemployment benefits, fell by 3700 in October. It was expected to rise by 5100. Also September’s number was revised to the upside – a small rise of 1300 instead of 5300 initially reported.
GBP/USD rose above the minor resistance level of 1.5923 after the release, but is still struggling to settle over it. The next barrier is 1.60 which served as strong support and resistance recently. Levels above are 1.6107 and 1.6270. Below, 1.5850 and 1.5750 will cushion a fall. For more technical levels and analysis, see the British pound forecast.
The unemployment rate for September was left unchanged at 7.7%, as expected. Average cash earnings are at a yearly rise of 2%.
In addition to the employment data, the minutes from the last rate decision were released. No change was seen – Andrew Sentance still wants a rate hike to fight inflation, Adam Posen still wants 50 billion of additional pound printing to help the economy, and the rest, including BoE governor Mervyn King, wanted no change in policy.
The pound is affected by the Irish crisis as well – British banks are exposed to Irish debt, and British officials said they would help Ireland. This weighs on the pound that lost ground at the beginning of the week.
Update 11:00 GMT: Gains have been erased. British commitment to help Irish weakens pound.
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