- Phil Noble/Reuters
The British pound is climbing after the latest data showed that UK unemployment dropped below 5%.
The currency is up by 0.5% at 1.3175 against the dollar as of 12:02 p.m. ET.
Earlier in the day, the Office for National Statistics showed that UK unemployment fell to 4.9% for the three months to May, the lowest since 2005. Additionally, the number of employed people hit 31.70 million, the highest on record.
Separately, the Bank of England said that Brexit isn’t killing the economy yet. Still, the central bank also suggested that there was still a high degree of uncertainty as businesses are just now attempting to formulate their strategies for a British exit from the European Union.
“Although sterling and interest rates have not fully recovered from the Brexit decision, equity markets have, and fear of contagion has died down,” wrote Marc Chandler, the global head of currency strategy at Brown Brothers Harriman.
However, “the market may need more incentive to take sterling much above $1.3230,” he added, noting that the jobs data was collected ahead of the Brexit vote and that the BOE survey, although more timely, “may still be too anecdotal, which means that it is unlikely to alter expectation for the BOE to cut rates and initiate a new asset purchase program as early as next month.”
As for the rest of the world, here’s the scoreboard from 12:02 p.m. ET:
- The Turkish lira is down by 1.1% at 3.0743 against the dollar after news that the S&P downgraded Turkey to BB from BB-plus and changed the country’s outlook to negative. The S&P noted that the attempted coup “further eroded the country’s institutional checks and balances,” according to MarketWatch, and it added that “risks to Turkey’s ability to roll over its external debt have increased,” according to Bloomberg. Notably, Turkish president Recep Tayyip Erdogan will chair a meeting today of the National Security Council and then will announce an “important decision.” “Markets have reacted badly to the ongoing purges of the judiciary, military, police, and academia. If Erdogan announces more draconian measures, we suspect that USD/TRY (which made a marginal new high for this move) will likely make new all-time highs,” argued Chandler. The South African rand has recovered some of its earlier losses, now trading little changed for the day at 14.3496 per dollar. Earlier in the day, the country’s CPI rose to 6.3% year-over-year in June, as expected. ” Nonetheless, the weakness of the economy, coupled with the recent rise in the rand, means that interest rate hikes are off the table in the near term (including at tomorrow’s MPC meeting),” argued Capital Economics’ senior emerging markets economist William Jackson in a note. The US dollar index is little changed ahead of a quiet data day. The euro is weaker by 0.2% at 1.10007 against the dollar. The ECB meets on Thursday. The Japanese yen is weaker by 0.5% at 106.64 per dollar. The Bank of Japan meets next week.