Good morning,
The pound had another difficult session on Friday after Bank of England policymaker Michael Saunders, who voted for an interest rate hike last month, said he wanted more information about the impact of the new Omicron coronavirus variant before deciding how to vote this month. Saunders said Omicron might slow Britain’s economy, but it could also add to inflation pressures if it led to people spending more money on goods, when supply chains are already strained. Sterling fell after the comments by Saunders which investors took as reducing the likelihood of the BoE raising rates from their current all-time low of 0.1% at the meeting on the 16th December. Analysts are pricing in only a 33% chance of a December rate hike after the speech, down from about 75% last week before news broke of the new variant.
The US also released headline jobs figures which showed the economy created far fewer jobs than expected in November, in a sign that hiring started to slow even ahead of the new Covid threat. Nonfarm payrolls increased by just 210,000 for the month, which was well below Wall Street expectations of 573,000. Despite the big hiring miss, the unemployment rate fell to 4.2%.
Have a great day.
Author: William Jones, Senior Relationship Manager.
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References
https://www.cnbc.com/2021/12/03/jobs-report-november-2021.html