Sterling rebounds from 7-year euro low after jobs data report

British Pound

The pound bounces up from its 7-year low versus the euro as higher-than-expected jobs data report covered it from intense pressure.

The pound has passed a milestone on declines against the euro before the employment and wages data were published. It was at £0.9142 per euro, the weakest since 2010, omitting the all-time-low it touched briefly during October’s flash crash.

The pound climbed 0.2 percent over the session, reaching £0.9103, with investors moving in after the data showed unemployment failing to a 42-year low in the second quarter, when basic wage growth also improved.

The Brexit vote’s uncertain impact on the economy left the pound exposed to the twists and turns of economic data and how they feed into the outlook for tighter monetary policy at the Bank of England.

The change in tone of the data could offer the pound the chance of some sustained relief after a near-9 per cent decline against the euro since its intraday closing peak for 2017 in April, according to analysts.

The Monetary Policy Committee was split by 6-2 in favor of keeping rates on hold in August, with the number of votes for a rise falling from three at the previous meeting.

The recovery on Wednesday also boosted the pound 0.2 percent over the day against the dollar at $1.2894. It was down 0.2 percent overall against the world’s reserve currency before the data release.

According to Kallum Pickering, senior UK economist at Berenberg, “For the UK monetary policy outlook, today’s upside surprise for labor demand and acceleration in wage growth matters far more than yesterday’s downside surprise for headline inflation.”

 

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