Employment levels in the UK surge despite poor GDP figures as BOE minutes suggest further QE is likely
16/Aug/2012 • Currency Updates•
The euro fell yesterday as fears about Greece’s exit from the eurozone resurfaced, driving investors away from the shared European currency. Greece’s Prime Minister Antonis Samaras is going to meet other European leaders today to convince them to ease the terms of the aid. Additionally, Greece may ask for another tranche of the bailout. The problem is that Germany’s leaders signalled that they are not going to scale down demands for Greece.
The euro also weakened on speculations that the Swiss National Bank sold the currency to boost its holdings for the Great Britain pound. Analysts predict that today’s report would show that eurozone inflation was stable last month. Such expectations play in favour of the euro.
In the UK, the ILO unemployment rate fell to 8.0% in Q2 , compared to a rate of 8.1% recorded in Q1. Meanwhile, the claimant count declined by 5,900 persons to 1.59 million in July.
Yesterday, the Bank of England (BoE) in its minutes revealed that the policymakers have unanimously decided to retain quantitative easing at £375 billion and have maintained the interest rate at 0.50%.
The economic calendar is relatively quiet in European hours. UK Retail Sales figures are in focus, with expectations calling for receipts to rise 2 percent in July compared with the previous year. Traders will look to the outcome to gauge follow-through on better-than-expected Jobless Claims data over the same period. An upside surprise may offer a near-term boost to the British Pound, although if yesterday’s dynamic continues to hold then follow-through may prove limited as prices struggle to find directional conviction.
The US Dollar had a slight slump against the Pound yesterday, following positive unemployment figures out from the UK. Slightly lower than anticipated domestic CPI inflation figures, have opened the door for the Fed to further loosen US monetary policy, meaning that the Greenback could suffer further downside in the lead-up to the weekend as risk trends eye US data due to be released later on in the week.