Forex News – Sterling falls after poor UK unemployment data

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Sterling plummeted after data showing UK unemployment and jobless claims rose in July, marking the biggest jump in over two years.

The Office for National Statistics announced that the number of British people claiming unemployment benefits rose by 37,100 last month, which was much more than the forecast for an increase of 20,000. The increase was the most since May 2009.

The unemployment rate rose to 7.9 percent, versus economists’ expectations for an unchanged reading of 7.7 percent. The number of Britons without a job on the wider ILO measure increased by 38,000 to 2.494 million jobless during April to June.

Rising unemployment is likely to further bruise consumer confidence, already affected by rising prices due to high inflation. Morale has also been battered by low wage rises and recent riots in major British cities.

Wage increases have stayed well below inflation, which is now above 4 percent, providing little relief for households who have already tightened their budgets.

After release of the data at 08:30 GMT GBPUSD fell over 70 pips from 1.6418 to 1.6347 within two minutes.