Forex News – Sterling falls after UK jobs data but recovers quickly

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Sterling fell across the board this morning after UK employment data showed the number of people claiming unemployment benefits rose at its fastest pace in almost two years in the month of June from a revised 22,500 to 24,500 claimants. The result was much worse than what economists had forecast at 15,000 claimants.

The unemployment rate for the 3 months to May 2011 was 7.7 % of the economically active British population, which was down 0.1% on the quarter.

Sterling fell around 45 pips against the dollar to a session low of 1.5906 within a minute of the news but soon recovered to 1.5944.

The Euro spiked up over 20 pips against the Pound to 0.8840 from 0.8819 but soon fell again to 0.8815.

“The underlying market picture is still quite weak,” Hetal Mehta, an economist at Daiwa Capital Markets Europe Ltd. in London, said before the data was released. “We still haven’t seen the vast majority of the public-sector job cuts come through. We will see unemployment rise and that will be a major factor for the Bank of England to keep policy on hold.”