Pound approaches five-year lows after weak UK data

Pound approaches five-year lows after weak UK data

18 March 2015, 11:56

On Wednesday the pound dipped to nearly five-year lows against its U.S. peer, after a report showed that the U.K. unemployment rate remained unchanged in January and that average U.K. earnings rose less-than-expected.

GBP/USD hit 1.4668 during European morning trade, the pair's lowest since June 2010; the pair subsequently consolidated at 1.4673, sliding 0.51%. Cable was likely to find support at 1.4343 and resistance at 1.4845, Tuesday's high.

The British currency was also lower against the euro, with EUR/GBP declining 0.59% to 0.7227.

The U.K. Office for National Statistics reported that the rate of unemployment was unchanged at 5.7% in the three months to January, disappointing expectations for a decline to 5.6%.

The claimant count fell 31,000 in February, compared to expectations for a decline of 30,000 people. January’s figure was revised to a drop of 39,400 people from a previously reported decline of 38,600.

The U.K. average earnings index, including bonuses, climbed by 1.8% in the three months to January, missing forecasts for a gain of 2.2% and after increasing by 2.1% in the three months to December.

Excluding bonuses, wages rose by 1.6% in the three months to January, below expectations for a gain of 1.8% and following a 1.7% increase in the three months to December.

Moreover, the minutes of the Bank of England's most recent policy meeting showed that all nine members of the Monetary Policy Committee were in favor of leaving the key interest rate at a record low of 0.5% and making no changes to the central bank's £375 billion asset-purchase program.

In the meantime, investors expect the Federal Reserve's monthly policy statement due later in the day to see if it drops its word "patient" before raising rates and signal that it is ready to hike rates depending on economic data.

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