The pound dropped a little this morning after a rise in Britain’s jobless numbers suggested fewer Bank of England rate increases could be needed in the coming months to bring down inflation, helping the broad dollar index to push back towards Monday’s five-week peak.
After Britain’s unemployment rate unexpectedly rose to 3.9% in the three months to March as more people sought to get back into the jobs market.
Current market pricing indicates at least one more 25 basis point rate increase from the Bank of England, with a good chance of a further hike, but analysts said this data could cause the BOE to be more cautious.
Broader factors are also weighing on the pound as well, A lot of the better news for sterling is already in the price. Is there enough good news in the economy to go outright long? The answer is not really. What markets were pricing in was a better economic outlook, not a good one.
Market expectations were for a fed rate cut this year, but the data just isn’t playing ball, and adding to that, there is a bit of safe haven demand.