Pound recovers from jobs data disappointment while investors await Fed decision
Markets were digesting data showing that the number of people in work across the UK has fallen by 56,000 in recent months.
The pound recovered after initial disappointment over the UK jobs report and climbed higher against the greenback as investors awaited the Federal Reserve’s interest rate decision.
Sterling was up about 0.1% against the euro to trade at 1.135 but rose more than 0.3% versus the US dollar to 1.336.
Markets were digesting data showing that the number of people in work across the UK has fallen by 56,000 in recent months, the biggest quarterly drop in more than two years.
Figures from the Office for National Statistics (ONS) also showed average earnings increased by 2.5% in the year to October, below the rate of inflation.
Disappointment over the jobs report was countered by weakness in the US dollar as investors took stock of inflation data from across the pond ahead of the Fed rate decision set to be announced later on Wednesday.
Connor Campbell, a financial analyst at SpreadEx, said: “More inflation disappointment drove the dollar lower this afternoon as investors process what the latest data means for this evening’s Federal Reserve statement.
“The year-on-year core reading rose by a Fed target-missing 1.7% – not enough to prevent the central bank from announcing its long-signalled interest rate rise, but perhaps the kind of news that will push a few more Fed members to the dovish end of the spectrum when considering the pace of any further hikes in 2018.”
The pound’s gains weighed on the FTSE 100, which edged into the red by 0.05% or 3.9 points to 7,496.51 points, but the blue chip index managed to outperform European peers as the French Cac 40 and German Dax ended the day down 0.5% and 0.4%, respectively.
In oil markets, Brent crude prices tumbled 1.5% to $62.82 (£47.02) per barrel as investors reacted to data showing a rise in US petrol stocks as well a further increase in US crude production.
In UK stocks, Tui shares edged higher by 4p to 1,413p as the travel giant reported a 12% rise in annual earnings to 1.1 billion euro and said it would grow annual earnings by at least 10% again in the new financial year.
Excitement was offset by news that Britons are beginning to cut back on long-haul holidays in light of the weaker pound.
Sky shares edged lower by 3p to 1,009p amid reports that Walt Disney is close to confirming at takeover of 21st Century Fox, which owns a 39% stake in the broadcaster.
Dixons Carphone was at the top of the FTSE 250, up 14.2p to 181.6p, as investors shrugged off a 60% fall in pre-tax profits and focused on news that the retailer had a good start to peak trading ahead of Christmas following a record Black Friday.
Carillion tumbled 1.5p to 16p after the troubled infrastructure giant agreed to offload the bulk of its healthcare division to Serco for £47.7 million while estate agent Purplebricks slumped 35.25p to 361.75p as it revealed that higher administrative expenses bit into pre-tax profits.
The biggest risers on the FTSE 100 were Hargreaves Lansdown up 72p at 1,693p, Glencore up 6.55p to 354p, BAE Systems up 10p to 565.5p, and Barclays up 3.2p to 203.8p.
The biggest fallers on the FTSE 100 were Ashtead Group down 111p to 1,949p, Centrica down 5.3p to 139.5p, Shire down 83p to 3,677.5p, and Aviva down 10.5p to 501.5p.