Cable Edges Lower as Dovish BoE Minutes Offset a Robust Employment Report

Cable slipped on Wednesday in the wake of a more dovish than expected Bank of England minutes despite stronger than expected jobs data which revealed a slip in the number of individuals looking for claims and a reduction in the unemployment rate. Still the GBP/USD was able to hold support levels at the bottom end of the range as all eyes turn to Thursday’s ECB meeting.

The Bank of England Monetary Policy minutes unexpectedly showed that many of the hawks have now turn dovish at the January meeting. The vote to leave the repo rate unchanged at 0.5% was a unanimous 9-0, with McCafferty and Weale discontinuing their dissent in favor of a 25 basis point hike.

The minutes noted that for these two, the decision this month was finely balanced, and that they noted the risk that low inflation might persist for longer than the temporary factors implied and concluded that this risk would be increased by an increase in Bank Rate at the current juncture. The minutes showed that the BoE thinks there is a roughly even chance of seeing negative CPI rates at some point in the first half of 2015, though the impact of lower oil prices should prove to be temporary.

Helping Cable gain its footing was a stronger than expected employment report. The UK December claimant count came in better than expected in dropping 29.7k while the official ILO unemployment rate for November dropped to 5.8%, better than the expected dip to 5.9% and from 6.0% in October.

Average weekly household earnings, which is a metric that the BoE is keeping close tabs on, came in near to expectations in rising to 1.7% year over year in the with-bonus figure in the three months to November, a new trend high up from 1.4% in October. The ex-bonus figure rose 1.8% year over year, also a new trend high.

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