Pound bounces back strongly

Financial and commodity markets analytics

The British pound has bounced back sharply today after a fall in the unemployment rate, and a report from the central bank that showed no real slowdown in economic activity after Britain’s decision to leave the EU.

At 9.00pm (GMT) the British currency was trading at US$1.3211c up from US$1.3108c in yesterday’s trading.

A Bank of England report showed today that "no clear evidence" of a slowing economy has emerged in light of the UK’s decision to leave the EU which came as a shock to the market.

The unemployment rate also caught the market by surprise falling to an 11 year low of 4.9 percent

“It’s a double push really for the pound,” said Neil Jones, London-based head of hedge-fund sales at Mizuho Bank Ltd. “We have got insight into the thinking of businesses and it looks like the hiring plans” are not expected to change “for the moment, so we can probably maintain some healthy levels of employment.”

Some though are not convinced that the jobless rate will hold, predicting it will drift higher in the coming months as the aftermath of Brexit sets in,

"Indeed, we expect the unemployment rate to begin to drift up over the coming quarters. The upshot is that these may be the best set of labour market figures for a while," noted Paul Hollingsworth, UK economist at Capital Economics.


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