UK unemployment numbers out

Wednesday, 13 April 2011 12:10

UK unemployment fell unexpectedly in the three months to February, and employment rose as figures came out Wednesday, suggesting a modest improvement in the labour market. The number of people claiming jobless benefit rose by 700 in March after a revised 8,500 fall in February and the market was expecting a fall of 4,200.

The number of people without a job on the wider ILO measure fell by 17,000 in the three months to February to 2.480 million, taking the jobless rate down to 7.8 percent, compared with forecasts for a steady reading of 8.0 percent.

Off the back of these numbers sterling fell to a new low against the euro on expectations that interest rates would continue to lag behind those in the euro zone. The weak inflation reading on Tuesday eased pressure on the central bank to raise interest rates when the British economy is still fragile.

While potential rate hike chances have been pushed back to October from August, investors are factoring in a 53 percent chance of another ECB rise in July. The euro was last up by 0.1 % in early trading at 89.13 pence. If it breaks 89.41 pence, the high hit in late October 2010, it could be poised for a rise to its March 2010 high of 91.50 pence.