Economic news

Sterling Steadies near 5-Week Highs after Labour Market Data

LONDON, Sept 14 (Reuters) - Sterling steadied close to 5-week highs against the dollar and 3-week highs against the euro on Tuesday, supported by labour market data that showed the total number of payrolled employees in Britain has climbed to pre-pandemic levels.

The pound has been range-bound in recent days as investors assess Britain’s post-lockdown economic recovery and how that may play into the Bank of England’s stance on interest rates, currently at record lows.

British employers added a record 241,000 staff to their payrolls last month, lifting the total number of payrolled employees just above the level they were before Britain first went into a COVID-19 lockdown last year, official data showed on Tuesday.

Businesses reported more than 1 million vacancies in August - an all-time high - and the unemployment rate fell slightly to 4.6% in the three months to July, the Office for National Statistics said, in line with economists’ expectations in a Reuters poll.

The data shows continued recovery in Britain’s job market as the government phases out its furlough support programme, which will finish on Sept. 30.

Sterling traded 0.3% higher on the day at $1.3875 by 0811 GMT, making a steady climb into positive territory after the data, which was released at 0600 GMT. That was off a 5-week high of $1.3890 hit earlier on Sept 3.

Against the euro, the pound was 0.2% higher at 85.20 pence per euro, off a 3-week high of 85.11 pence hit on Monday.

“Sterling is doing well this morning after promising UK labour market data, which showed payrolled employment having now eclipsed its pre-pandemic level, and another pleasing fall in the unemployment rate,” said Michael Brown, senior market analyst at Caxton FX.

“GBP is also likely finding support as a result of signs of increasing wage pressures - vacancies at an all-time high, and earnings continuing to increase at a rapid clip - which may be causing market participants to bring forward their expectations of a BoE hike. Steadier global risk appetite, with signs of equity dip buyers beginning to emerge, will also be helping the high beta GBP.”


Elsewhere in economic news, British grocery prices rose 1.3% on a like-for-like basis in the four weeks to Sept. 5 year-on-year, with supermarket promotions hitting record lows, market researcher Kantar said on Tuesday. It said that for much of 2021 shoppers were shielded from price increases, with more products being sold on promotion compared to 2020.

Inflation data is due on Wednesday and retail sales data is due on Friday.

The Bank of England expects inflation to rise sharply this year and hit a peak of 4%. A strong reading for inflation would reinforce expectations that the Bank of England (BoE) is set to tighten its monetary policy quicker than the European Central Bank or the U.S. Federal Reserve.

A Reuters poll found that investors believed the BoE will raise borrowing costs by the end of 2022.

In other economic news, Britain’s travel sector is bracing for a new wave of job cuts, with an industry trade body saying that more than two thirds of its members were planning to make redundancies shortly due to the government’s restrictive holiday rules.

Airlines and travel companies have slammed Britain’s travel rules as overly expensive and complicated, and blame them for a second lost summer of holiday trade in 2021.

In political news, Britain’s Brexit minister David Frost on Monday said that the European Union must move in negotiations over the trading arrangements in Northern Ireland or Britain may unilaterally suspend the “protocol”.

Under the protocol, Britain agreed to leave some EU rules in place in Northern Ireland and accept checks on goods arriving from elsewhere in the United Kingdom, in order to preserve an open land border with EU member state Ireland.

Britain has asked for “substantial and significant change” covering areas including the movement of goods into Northern Ireland, standards for goods and governance arrangements, and a treaty framework which is not policed by the European Court of Justice.

(Reporting by Ritvik Carvalho; Editing by Emelia Sithole-Matarise)

Source: Reuters

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree