Pound slips after weak jobs data

AFP - Wednesday, July 16 05:33 pm

LONDON (AFP) - The pound was off earlier highs Wednesday afternoon after weaker-than-expected labour market data boosted expectations that the next move in interest rates will be down.

The Office for National Statistics said the claimant count, measuring the number of Britons claiming the jobseekers' allowance, rose by 15,500 in June, the biggest rise since December 1992, when it rose by a massive 71,400.

The rise is well above forecasts for a smaller rise of 11,000.

"Rising unemployment should keep a lid on pay growth ... so the next move in interest rates should be down - albeit not for a few months," said Vicky Redwood, UK economist at Capital Economics.

Elsewhere, the dollar was a touch higher after the annual rate of inflation in the world's biggest economy was revealed to have hit a 17-year high in June.

Also helping the dollar come off lows was news that US industrial production figures for June rose unexpectedly after two months of declines.

Meanwhile, eurozone headline inflation was confirmed at 4.0 percent in June. The euro gained slightly on the news but falls in oil prices meant it remained well off the all-time high it hit against the dollar Tuesday.

The price of crude oil fell by around 10 US dollars on Tuesday and has remained well below 140 US dollars a barrel in trade Wednesday as fears for global economic growth escalate.

The Fed chairman stressed the central bank's main priority is to help financial markets return to normal, undermining expectations it will hike interest rates sometime soon.

Sterling

1343 GMT

1105 GMT

US dollar

2.0002 down from

2.0033

Euro

1.2590 down from

1.2577

Yen

208.62 up from

208.05

Swiss franc  

2.0196  up from

2.0121

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