Forex News – UK unemployment at 16 year high

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The November unemployment rate in the United Kingdom has rise to a sixteen-year high of 8.4 percent, higher than expectations for it to remain unchanged at 8.3 percent.

Meanwhile, December’s claimant count was surprisingly much lower than the expected 10,000. November’s number was revised down to 200 versus the prior 3,000 claimants.

While the ILO measure of unemployment over the 3-months to Nov showed an increase of 118,000, the claimant count measures suggest that we should see lower readings over the coming months.

Overall the data suggests that the UK labour market is somewhat moving “sideways” and not quite weakening at least.

Sterling was little changed after the data at 09:30 GMT but still hovering near an 18-month low against the dollar. At news time GBPUSD was at 1.5336, down from an early European session high of 1 .5376. The pair soon bounced higher after the jobs data to 1.5366 within 30 minutes.

The British economy is struggling to recover and the 2012 economic outlook is still bleak with downside risks. The Bank of England is expected to expand its quantitative easing program next month to add an additional 75 billion pounds to the current asset purchase plan. This will weaken the pound.