Unemployment rate helps the Pound glide on the currency markets

As we cross the mid-week point, the pound is still fighting strong across the board although it’s gains are now being limited as investors and traders alike become more cautious of overbuying sterling positions. The headline news from yesterday was that the UK unemployment rate has dropped from 7.8% to 7.7% in the last quarter, posting the first decrease in this figure since Mark Carney recently linked this rate to future interest rate hikes, setting 7% as the target. This was accompanied by a reduction in the number of people claiming job seekers allowance which fell by 32,600 people and is now at its lowest level since February 2009. As expected this news saw an immediate spike in exchange rates against all major currencies providing some the best buying levels that we have seen since the beginning of the year. Against the Euro the pound reached the highest level since January, briefly pushing through the current ceiling of resistance. This spike however proved to be the high of the day as the resistance held and despite the good news, rates slowly dropped lower over the course of the day, confirming the strength of the resistance point and increasing the likelihood that rates have reached their short term peak. Against the US Dollar the pound had a little more joy, aided by some weak manufacturing data from across the pond. GBP/USD gained 1 cent in yesterday’s trading and held these gains by close of business subsequently providing the best buying levels since the beginning of February. Further afield, there has been key data overnight for the New Zealand Dollar. The RBNZ announced that interest rates will remain at 2.5% but more importantly stated that rate hikes of between 3-5% were expected in 2014. This announcement has already seen the Kiwi Dollar gain 2 cents against the pound since the decision as investors look towards New Zealand for their first potential interest gain since the beginning of the global recession. Today’s main data releases to note are the monthly report from the European Central Bank at 9am, and the UK inflation report at 10am. President Draghi will speak at 12:40 before a raft of US data at 1:30pm including the latest jobless claims figures.