Falling unemployment boosts sterling

| July 15, 2010 | 0 Comments
Falling unemployment boosts sterling

The reported decline in UK unemployment figures last month gave sterling an extra boost, pushing the euro/sterling rate towards the €1.20 mark, exchange rate analysts observed.

Unemployment fell to 7.8% in June, down from 8.0% in April.

Exchange rate specialist Caxton FX said the rise in employment shows employers are willing to recruit, and represent a recovering economy.

“Today’s numbers reaffirm the improving conditions in the UK economy with claimant numbers now having fallen for the past five months,” said Duncan Higgins, senior analyst at Caxton.

“Amid expansion in most UK industries, employers are beginning to hire again.”

This has improved confidence in sterling, he added.

“The pound’s strength against the dollar at present is predominantly a result of improved market sentiment,” he said.

However, he warned that the unemployment rate could rise again when the coalition government’s spending cuts come into effect.

“As yet these unemployment figures represent pre-spending cut data and the real test will be to see how the labour market holds up over the coming months.”

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