Jobless claims in Britain rose for the first time in six months surprising analysts and raising doubts about the economy’s resilience before big public spending cuts next year.
The Office for National Statistics said the number of people without a job on the internationally comparable ILO measure rose by 35,000 to more than 2.5 million in the three months to October. That was the first increase since the three months to April and the biggest since the first quarter of the year.
The pound fell against all of the most actively traded currencies and British government bond futures rose on the figures which contrasted with more upbeat activity data in recent weeks.
“The increase in joblessness is a bit of a standout and markets may focus on it as an example of what may happen in 2011,” said Philip Shaw at Investec.
With more cuts coming over the next few months the outlook is looking slightly bleaker for the UK economy and the pound has slumped as a result.
Credit ratings agency Moodys have threatened to review Spain’s credit rating due to untenable levels of public debt amounting to around 1/3rd of their annual GDP. The ratings agencies announcement has coincided with the Irish vote where they will decide whether to accept the European bailout money. The only gripe they have is the high interest rate they will be paying, at around 6% it is very high but they are unlikely to haggle the price down as the free market rate is much higher.
UK clients with Sterling in their pockets looking to buy almost any currency apart from the Euro might be advised to place protective orders in the market or even look at buying their currency on either a forward contract or on the spot market to avoid further depreciation in the rate of exchange over the coming months.
