The Office for National Statistics has released the monthly unemployment figures, with the headline UK ILO Unemployment figure for May was in line with expectations at 6.5%. This is the lowest unemployment rate since October to December 2008; this was just before a significant amount of redundancies began. Jobless claims fell by 36,600, which is higher than the estimated reduction of -27,000 jobs.
The disappointing part of the data was the wage growth, average earnings including bonuses were 0.3%, below expectations of 0.5%. This is likely to be the caveat for a delayed hike in interest rates, as the Bank of England will argue that there is still slack in the economy. The kneejerk move for cable was to weaken against the greenback, as hopes of an early rate rise from Tuesdays surprise increase in CPI to 1.9% seemed to dissipate.
The headline unemployment figures are strong and show an improving situation; sentiment for sterling is tightly aligned with the expectations of the timing monetary policy. Over the medium term Sterling should strengthen against the Euro and US Dollar, as the economy continues to improve. Cable traded to a high of 1.7158 during the Asian session which is likely to cap any immediate upside.