The decline in the UK unemployment rate also contributed to lifting the GBP/USD rate and bringing down the EUR/GBP.
Pound sterling suddenly rose at the beginning of the European session today (16/November), following a series of bullish news from the country of origin of The Three Lions.
The release of fairly good UK jobs data has lifted GBP/USD to a daily high of 1.3465 and dropped EUR/GBP to a 12-day low.
Coverage of the BoE Monetary Policy Committee hearings in the UK parliament also underpinned sterling's position.
In yesterday's audience, BoE Governor Andrew Bailey emphasized that he was not comfortable with the current inflation situation and opened up opportunities for rate hikes at every policy meeting.
Bailey's statement reinforces market expectations for a BoE rate hike in December, with the probability increasing from 50% to 60%.
"Sterling rallied in US trade on Monday, sending GBP/USD up 0.25 percent to 1.3443 following increased expectations for a BoE rate hike, as the pound continues to consolidate above an 11-month low hit last week at 1.3354," said Paul Spirgel, a market analyst from Reuters.
The rebound in the pound sterling in the forex market is then getting tougher due to the release of UK employment data today.
Bailey previously said that the central bank needs to look at the labor market situation after the end of the pandemic stimulus first to ensure a conducive situation for raising interest rates.
With the data that has just been released, the prospect of a BoE rate hike in December 2021 is becoming more and more real.
The UK Office for National Statistics (ONS) reported that the UK unemployment rate eased from 4.5 per cent to 4.3 per cent in September 2021, better than the market estimate of 4.4 per cent.
The number of jobless claims in October 2021 also fell by 14.9k, dispelling fears that the end of the pandemic stimulus would trigger a rise in unemployment.
"Early October estimates show the number of people in payrolls has risen sharply this month and is well above pre-pandemic levels," said Sam Beckett, ONS Head of Economic Statistics. smaller than the laid-off staff. In addition, the number of vacancies again hit a new record high."
Market participants will next monitor the release of inflation data on Wednesday and retail sales on Friday.
Both could also affect the probability of the BoE's future rate hikes.
Meanwhile, the UK-EU dispute over the Northern Ireland Protocol continues to heat up.
Most analysts don't think the current political exchange of rhetoric will have much of an impact on Sterling, but the currency could be impacted if the UK actually triggers article 16 of the Northern Ireland Protocol.
Prime Minister Boris Johnson yesterday said Britain could trigger article 16 "with reason and appropriate".
European Commission Vice President Maros Sefcovic warned there would be "serious consequences" for London and Brussels relations if Britain suspended the protocol.
Post a Comment for "UK unemployment rate drops, sterling strengthens"