What Does the ILO Unemployment Rate Figure Mean for Forex? - Vantage FX Comments

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Nov 15, 2013, 08:40 ET

London (PRWEB UK) 15 November 2013 -- On Wednesday it was announced that the UK unemployment rate dropped to the lowest it has been since 2009 (BBC, 13 November 2013). The unemployment figure fell to 2.47 million which suggests the Bank of England may hike interest rates sooner than previously predicted.

This strengthening labour market of course makes for a brighter outlook for the UK economy.

Vantage FX Head of Market Analysis Jay Mawji commented:

“There is no doubt that for sterling the ILO Unemployment Rate is the most important figure.

“The Bank of England had established ‘forward guidance’ where it abandoned the inflationary figure and adjusted interest rate expectation based on the unemployment rate; when unemployment fell to 7%, the Bank of England were going to raise interest rates.

“However, with a recent upturn in the UK economy and the falling unemployment rate, Mark Carney commented that 7% wasn’t a number set in stone, but that their ‘intention is to maintain a simulative stance of monetary policy until there has been a substantial reduction in the degree of economic slack.’ Well, unemployment was at 5% before the economic crisis…. Is 5% the new 7%?”

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Robert Berkeley, Vantage FX, http://www.vantagefx.co.uk/, +44 2076218925, [email protected]