The UK remains resilient in the turmoil

17 November, 2016

Pound declines on Wednesday on the official employment data, which showed that the rate in the UK fell in September. There was an unexpected increase in October for the number of unemployment benefits applicants. At the same time, the wage growth missed estimates.

The Office for National Statistics said that the UK unemployment rate fell by 4.8% in the three months leading to September, although it was projected to hold on the same level of an 11-year low at 4.9%. The number of applicants for the unemployment benefits rose in October to a seasonally adjusted 9,800 despite the projected 200. Coming above the previous month reading of 5600 claims. Meanwhile, the average level of wages including bonus rose by a seasonally adjusted 2.3% in line with the expectations. The average wage, excluding the bonuses, rose by 2.4%, which also tallies with the rising forecast for three months to August by 2.3%.

Despite the projected cut-offs in the financial sector, the country remains resilient to the downbeat expectations mainly due to the weakened Pound propelling the growth of local export companies as it becomes easier for them to compete on the international market and boost their revenues.

Gold futures posted growth during the European session on Wednesday, although it reversed gains as expectations rose about FED raising interest rates next month. Analysts have warned that near-term prospects for Gold remain unclear. The prices of the precious metal have fallen by more than 6% over the past week on the expectations that the budget spending and tax cuts during Trumps administration can accelerate the economic growth and inflation, leading to higher interest rates.

According to the CME futures data, the likelihood of a rate hike in the United States on the 13th – 14th December rose to 90.6% on Wednesday. Bullion is sensitive to the rate increase in the US because it cut yields further making the safe heavens unattractive for investors.

The US dollar cut through the 2003 peak on Wednesday, rising 0.34% to a 100.54 level.

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