UK job vacancies fall for the first time in two years

GBP

The pound fell against the USD on Monday and started the week with a lack of significant data to drive the currency.

Today’s releases include UK jobs data and on Wednesday the focus will return to UK inflation data, which may shed light on whether the Bank of England will opt for a second consecutive 50 basis points hike on interest rates in September. CPI is expected to rise to 9.8% for the month of July.

Markets are currently pricing in not only an 85% chance of a 50 basis points rise in September but also a 125 basis points increase by year end. Despite a risk that the jobs market will start to tighten, the BoE may have little choice but to continue to raise interest rates aggressively to try curbing inflation. The jobs data already released this morning is showing a contraction in the market as the number of job vacancies in the UK has fallen for the first time in two years, while β€˜real’ pay – adjusted for inflation – fell by a record 3% in the quarter to June.

The unemployment rate in the quarter rose by 0.1 percentage points to 3.8%, which is still close to the lowest levels since the 1970’s. The pound lost 0.33% against the US dollar yesterday but was steady against the euro, even though there was no European data due to bank holidays.

In other news, pressure is on the BoE to review its mandate. Governor Bailey confirmed to Finance Minister Zahawi that the central bank is open to a reassessment. However, uneasiness is felt as to how much influence the government could potentially have on the BoE’s future decisions.

Key announcements

07:00 – GBP – UK Claimant count – reading -10.5k vs forecast -32.0k
07:00 – GBP – UK unemployment rate – reading 3.8% – forecast 3.8%
10:00 – EUR – Eurozone and German ZEW economic sentiment – forecast -57.0 and -53.8 respectively
10:00 – EUR – European Trade Balance forecast -20 bn
14:15 – USD – US Industrial Production forecast 0.3%