The Euro to Pound exchange rate fell and wiped out all of Tuesday’s gains after the latest Bank of England minutes and UK jobs data strengthened the UK currency.
The Pound firmed after the BOE minutes showed that policy makers were unanimous in their backing of maintaining interest rates at the record low level of 0.5% this month. The decision was widely expected by economists but the tone set by the policy makers could see the Pound fall in the near future as they try to talk down the currency.
According to the Office for National Statistics, the number of people claiming unemployment benefits dropped by 34,600 to 1.175 million, more than forecast and the overall unemployment rate held steady at 7.2%.
The number of people in work rose to a new record high of just under 30 million as more people created their own jobs via self-employment. Also adding support to the Pound was the rise in average earnings. According to the report earnings in the three months leading up to Janaury rose by 1.4% from the previous year.
“The recovery in the UK labour market appears to be slowing, implying that productivity may finally be starting to pick up. For now, we continue to think that the prospect of a prolonged period of below target inflation will prompt the Monetary Policy Committee to keep interest rates on hold until late 2015,” said an economist at Capital Economics Ltd.
The Euro did find support from construction output data which smashed forecasts. The figure was 1.5% higher than in December 2013, the second straight month of increases and the largest rise since June 2013. However, concerns over the situation in Ukraine continue to spook investors.
Euro (EUR) Exchange Rates
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