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London Markets: Pound rises as latest U.K. jobs data seals case for Bank of England rate hike

Economists said a December rate-hike from the Bank of England was virtually assured after data showing the end of furlough didn’t lead to a deterioration in the jobs market.

The Office for National Statistics reported that payrolled employees rose by 160,000 in October, after the furlough program ended in September. The statistics agency said a separate business survey suggests that the lack of redundancies wasn’t just a function of companies working through the layoff process. “Responses to our business survey suggest that the numbers made redundant was likely to be a small share of those still on furlough at the end of September 2021,” the agency said.

Markets had already priced in a December interest-rate hike, though in fairness, they had priced in a November increase that never came. And there’s still one more jobs report before the next Bank of England meeting.

“While some small uptick in unemployment is possible as a consequence of furlough payments ending for untenable jobs, strong employment gains, persistent wage pressure and a further rise in vacancies will likely support the case for an immediate 15bps hike in the bank rate,” said Kallum Pickering, senior economist at Berenberg.

The yield on the 2-year gilt
TMBMKGB-02Y,
0.574%

edged up to 0.57% from 0.56%. The pound
GBPUSD,
+0.37%

rose to $1.3466 from $1.3415, though still well below the levels before the last Bank of England meeting.

The FTSE 100
UKX,
-0.10%

was steady as other European markets
SXXP,
+0.18%

edged up to record highs. U.S. stock futures
ES00,
-0.12%

were a touch lower ahead of retail sales data.

Vodafone Group
VOD,
+5.35%

VOD,
-0.58%

rallied 4% as the mobile operator raised its fiscal year adjusted profit and cash flow guidance.

Imperial Brands
IMB,
-1.50%

added 2% as the tobacco company edged past earnings estimates and said it’s well placed to manage inflation.

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