"For the first time in a long time you don't have to be an optimist to see the glass is half full. The recovery has finally taken hold."
- Mark Carney, Bank of England Governor
The Pound has been highly volatile during the last two days, led mostly by fundamental data. Hence, on Tuesday, the cable fell more than 130 pips, while on Wednesday it almost recovered earlier losses and soared more than 120 pips. There are several reasons behind traders' rush to buy the Pound. First of all, official figures showed that the number of people seeking for unemployment benefits plunged 41,700 last month, far more than analysts expectation of a 30,000 drop, however not as much as October's positively revised reading of 44,700- the largest since 1997. The overall unemployment rate fell to 7.6%, in line with forecasts.
Another event scheduled on Wednesday, was Bank of England's quarterly forecast. Country's authorities are now more upbeat on domestic economy, saying jobless rate would fall much faster than initially was expected due to the acceleration in economic recovery. The BoE now predicts the unemployment could hit 7% late 2014, in case interest rates remain at current level. This target is much more optimistic, compared with late 2016 expected in August. In addition to that, BoE' Governor Mark Carney stressed out there is no need in hurry to increase interest rates. The MPC also suggested inflation would dip below the official target of 2% in the medium term. Though they do not exclude a possibility consumer prices may tick up slightly in the coming months due to the fact that recently announced utility prices hikes would take effect.
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