UK unemployment was slightly better than expected yesterday allowing the pound some room to breathe after being crushed violently by the euro and dollar over the previous days’ sessions.

While the claimant count figure was pretty much as expected, the unemployment rate came in at 7.9% below the 8% consensus. This compares favourably with the rate in the US (9.7%) and the EU (9.0%) but is still likely to rise given the lagging effect jobs data tends to have.

CPI out of the US was also released yesterday and, following the recent convention of US data, was better than expected. Government data showed that prices paid by US consumers rose 0.4% in August, driven mostly by higher prices at the petrol pump. We expect slight upticks to continue in the lead up to Christmas.

Further indications of sterling’s weakness can be found in the price against more faraway currencies. GBPAUD and GBPNZD have recently broached 20 year lows and look like continuing to fall.

Data today includes retail sales from the UK which should be strong due to the ‘Back to School’ surge and Initial Jobless Claims from the US.

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