UK employment data was better than expected this morning, with the unemployment rate dropping to 5.3% from the expected 5.4%.There are now 31.21m people in employment in the UK, which is the highest number since records began. The only slight disappoint in the figures was that Average Earnings (including bonuses) only rose 3% compared to a year earlier, which was below the 3.2% expected.
Whilst Consumer Price Inflation is subdued and there is no evidence of second round inflationary pressure, this gives the Bank of England plenty of scope to hold off from raising interest rates in 2016. The quarterly inflation report has already suggested that this would be the case, these figures seem to support that argument.
Sterling is actually having a reasonable day and has rallied against the majors but the gains may be limited.
