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Forex pairs in this Article » GBP/USD (Guatemala) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman commented on the action this morning surrounding the UK.

Key Quotes:

"In Europe, the BOE's recognition of limited spare capacity and a drop in the unemployment rate to 7.1% (from 7.4%) lifted sterling almost a cent to just above $1.6550. Recall on Monday, sterling had dipped briefly below $1.64. Sterling is also trading at its best level against the euro in a year, as the euro cross slips through GBP0.8200."

"The minutes from the Bank of England meeting earlier this month showed a greater recognition that the economy's spare capacity may be limited, which would seem to warn of the risk of upward pressure on prices. At the same time, it tried to reassure investors that the 7% employment threshold will not trigger a rate hike.It was shortly after that that the UK reported that the ILO measure of unemployment fell to 7.1% from 7.4% in November."

"Separately, the claimant count fell 24k in December, a quarter less than expected, and the November decline was revised to 34.3k from 36.7k. Average weekly earnings were unchanged at 0.9% on a 3-month y/y basis, unchanged from October, but a little less than the consensus had expected. Tighter labor market conditions are not pushing up wages."
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