GBP:
The unemployment rate in the UK is continuing to tumble. In the 3 months
to July the unemployment rate has fallen to 6.2% from 6.4% in the previous 3
months. This is the lowest jobless rate since November 2008, the quarter when
Lehmans Brothers Collapsed. This was a much bigger fall than anticipated
showing the labour market is continuing to improve and is a positive sign the
UK economy is continuing to head in the right direction. Also the number

GBP:
The unemployment rate in the UK is continuing to tumble. In the 3 months
to July the unemployment rate has fallen to 6.2% from 6.4% in the previous 3
months. This is the lowest jobless rate since November 2008, the quarter when
Lehmans Brothers Collapsed. This was a much bigger fall than anticipated
showing the labour market is continuing to improve and is a positive sign the
UK economy is continuing to head in the right direction. Also the number
of people receiving unemployment benefit fell to 966,500 in August, the first
time it’s been below one million since 2008.

On a slightly more negative note, UK earnings rose by 0.6% in the last 3
months, however, in real terms when taking into consideration yesterday’s
inflation rate of 1.5% wages are continuing to fall. 

There were also the results of the Bank of England’s interest rate decision.
The results were the same as last month with 2 members voting for an interest
rate hike and the remaining 7 members voting to keep interest rates at 0.5%.
  

USD:
Inflation in America came in lower than expected, as CPI fell 0.2% in August,
dropping to 1.7% year on year. The major reason for this was because of a big
drop in energy and gasoline prices, falling 2.4% and 4.1% respectively. The
drop in inflation has taken some pressure off the Fed having to increase
interest rates any time soon.

The US federal reserve revealed last night that another of its senior officials
was opposed to keeping interest rates at record lows. Projections released by
the Fed suggest that interest rates could now be 1.35% by the end of 2015
higher than the 1.15 projection made in June. The fed has also continued
its course of tapering quantitative easing by reducing asset purchases from
25B to 15B.
As a result we saw the dollar strengthen against most of its major peers when
this information was released. 

EUR:
There was also inflation data out from the Eurozone yesterday. Inflation in the
Eurzone is still very low; markets were expecting a fall from 0.4% to 0.3% year
on year but it did actually remain constant at 0.4%. One of the reasons the ECB
cut interest rates 2 weeks ago was to try and remove the continued threat of
deflation; the effect of this would not have been felt in this set of data.
However, it will be welcome news to the ECB that inflation has not fallen further.

Key Announcements:

09:30 BST:  GBP – Retail Sales (Aug) expected to rise to 4.1% from 2.6%

13:30 BST:  USD – Initial Jobless Claims expected to fall to 305k

13:30 BST:  USD – Continuing Jobless Claims expected to fall to 2.477M

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