Yesterday was another good day for the pound as lower unemployment figures surprised the market.

UK claimant count, the amount of people claiming jobseeker’s allowance, fell unexpectedly by around 6000 people against an estimate of a 12000 person increase. This could simply be down to an increase in temporary workers in Christmas retail spots who will be out of work once the January sales are over. While this may be only a blip and the trend of increased unemployment is likely to increase it did provide sterling with a little fillip.

And sterling could benefit from data as well today. GBP is one of the most data-volatile of the G10 currencies and while we expect today’s UK retail sales figure to be flat any result that is better than prediction will see sterling push for the 1.13 against the euro and 1.65 against the dollar.

The US dollar lost some of its recent strength as it moved away from 2 and a half month highs against the euro. Equity markets moved slightly higher yesterday which will account for the greenback’s falls.

The Fed’s decision last night was not a complete anticlimax as, although rates were kept on hold, the Fed announced to the market that it is starting to wind up its liquidity operations. Rates will continue to stay low however but the dollar strengthened overnight.

It is definitely no rest for the wicked on the Economics desk today with yet another packed data day in the lead up to Christmas. Apart from UK Retail Sales we have Initial Jobless Claims from the US at 13.30 and Philadelphia Fed Manufacturing PMI at 15.00

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