GBP/USD soars to daily highs as UK jobless claims fall more than expected

British pound managed to regain ground and rose to daily highs against the US dollar on Wednesday, as the number of jobless claims in the United Kingdom was reported to have dropped more than projected in October, while the rate of unemployment in the country fell to over four-year lows.

Having fallen to daily lows at 1.5879 earlier, GBP/USD climbed to a session high at 1.5941 at 9:30 GMT, after which consolidation followed at 1.5920, up 0.10% for the day. Support for the pair was expected at November 12th low, 1.5854, while resistance was likely to be encountered at November 12th high, 1.5992.

According to a report by the Office for National Statistics, the number of people who filed for unemployment assistance in the United Kingdom decreased by 41 700 in October, exceeding preliminary estimates, which pointed a drop by 30 000. The result in September has been revised to a drop by 44 700 claims from a drop by 41 700 claims previously. The total number of people claiming unemployment benefits fell to 1.31 million in October. On this basis the claimant count rate slowed down to 3.9% in October from 4.0% a month ago.

At the same time, the International Labour Organization (ILO) said that the rate of unemployment in the country dropped to 7.6% during the three months through September this year, compared to the same period in 2012, marking the lowest level since the three months through August 2009 and also meeting expectations, from a rate of 7.7% during the three months through August. With this result the rate of unemployment came one step closer to Bank of Englands objective, after which the bank is expected to tighten its monetary policy. The bank has pledged to keep interest rates and monetary stimulus at the current levels until unemployment in the country falls below 7.0%.

The average earnings including bonuses in the UK rose 0.7% during the three months through September, meeting projections, as the rate of increase of the indicator during the three months through August has been revised up to 0.8% from 0.7% initially.

The yield on UK benchmark 10-year gilts advanced to 2.81%, after having fallen by three basis points to 2.78%, Bloomberg imparted. Gilts has lost 3.5% this year through Tuesday, in accordance with Bloomberg World Bond Indexes.

Markets now awaited the testimony on the inflation and economic outlook by Bank of England Governor Mark Carney. During his statements volatility of pound crosses is usually high.

Meanwhile, most recent economic data, released out of the United States, including non-farm payrolls and Gross Domestic Product, added to the case that tapering of stimulus may occur soon. Federal Reserve Bank policymakers will probably reduce the monthly pace of asset purchases to 70 billion USD at central bank’s policy meeting on March 18th-19th from the current pace of 85 billion USD, according to the median estimate of 32 respondents in a survey, conducted by Bloomberg on November 8th.

Elsewhere, the sterling was higher against the euro, with EUR/GBP cross losing 0.25% on a daily basis to trade at 0.8428 at 10:21 GMT. GBP/JPY pair was steady, dipping 0.03% to trade at 158.46 at 10:22 GMT.