uploads///GBP Sep

British Pound Rallies on UK Employment Report

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Sep. 18 2015, Published 3:11 p.m. ET

Strong employment figures, wage growth near 6-year high

On September 16, 2015, the UK Office for National Statistics published the employment figures for July. In the three-month period between May–July 2015, the total and regular pay increased by 2.9% compared to the same period last year. This 2.9% increase in nominal terms in regular pay was the highest since the three-month period ending January 2009.

This rise was led by the private sector, with an annual wage rise of 3.4% while public sector wages grew by 1.2%. The UK employment rate was also seen rising to record levels of 73.5% in the three-month period.

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Pound reacts positively

The British pound–US Dollar pair (or GBP–USD) traded with a positive bias on the back of strong labor numbers. The strength of the GBP–USD pair was also partly reduced due to the diminished expectation of a rate hike by the US Federal Reserve on September 17.

The pair posted a high of 1.5529, but it lost some of the gains and ended at 1.5493 on September 16—still a 0.98% increase from its opening level.

Impact on the market

The iShares MSCI United Kingdom ETF (EWU) reacted positively to the data release and ended the day 2.31% higher on September 16, 2015. The First Trust United Kingdom AlphaDEX ETF (FKU) was also on a positive bias, rising by 1.35%.

The British ADRs (American depository receipts) also traded positive to the strong economic indicators, with Unilever PLC (UL) and Carnival Plc ADS (CUK) rising by 3.42% and 2.52%, respectively. BHP Billiton (BBL) also ended the day positive, with a rise of 4.47%.

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