Sterling remains uncertain following Cameron referendum announcement, in spite of improving labour market

Tom Tong24/Jan/2013Currency Updates

GBP

David Cameron promised a referendum as expected yesterday if he was to be re-elected during the next election. Unsurprisingly, the commitment put some downward pressure on sterling and opposition claimed that Cameron’s statement will bring 2 years of uncertainty for the British people to an end.

On the other hand, the claimant count released yesterday finally brought a brighter sign regarding the UK economy, but rather than making the pound rally, it mainly kept it from falling further.
The number of employed people in the UK has reached a 40-year high in numerical terms, the highest on record. On the other hand with open labour markets in the EU and increasing populations this might not come as a surprise. More importantly and not as widely expected the unemployment rate dropped from 7.8% to 7.7%.

The MPC meetings brought no surprises as keeping the interest rate unchanged received an unanimous vote, and increased asset purchases only received minimal support.

The only significant data out of the UK today is loans for house purchases which is expected to increase slightly, at 9.30 AM GMT.

EUR

With limited data out of the eurozone yesterday the common currency had a calm day, in general trading in a limited range.

The only outcome of the data yesterday worth mentioning was the consumer price index which improved slightly in December, which might bring some help in reinforcing the common currency at these levels in the short term.

Today, there is a large basket of PMI’s released from the eurozone, French, German and a composite index. Strong figures from both the service and manufacturing sector might help the EUR to finish the week on a high, on the other hand a unexpected slow down in the real economy might gloom the slightly positive shine on the European financial markets.

USD

With no significant data released from the US yesterday, the dollar was at bay for relative movements against its counterparts.

Today, on the other hand, we can expect initial jobless claims, USD Leading Indicators, and some inventory figures to be released; depending on the outcome, we might see the Greenback picking its own direction today.

The initial jobless claims is expected to increase with about 20.000 people; maybe not to surprising as seasonal employment is wearing off. On the positive side, the USD Leading indicator, which is a composite index of indicators used to forecast general economic trends in the US, has been turned in to positive in December, moving from -0.2% up to 0.4%.

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Written by Tom Tong

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