Thursday, April 17, 2008

Stronger UK Employment Numbers Fail to Help the British Pound

Stronger UK Employment Numbers Fail to Help the British Pound

The British pound strengthened against the US dollar, but that is more a function of dollar weakness than pound strength because the currency has fallen to new record lows against the Buy Euro.

UK employment numbers were slightly stronger than expected with average earnings increasing. Despite the steady employment numbers and the rise in producer prices, analysts strongly believe that the Bank of England will deliver another interest rate cut in the very near future given the sharp deterioration in housing market data. Although we do believe that the BoE is more apt to cut rates than the ECB, even though CPI has not increased that significantly, the rise in PPI is nonetheless worrisome for the central bank.

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