Pound climbs a second day as report shows resilient labour market

The pound rose 0.2 per cent to US$1.2319 on Wednesday (Oct 19) morning.
The pound rose 0.2 per cent to US$1.2319 on Wednesday (Oct 19) morning. PHOTO: AFP

LONDON (BLOOMBERG) - The pound rose for a second day as a report showed the United Kingdom's jobless rate held at an 11-year low, highlighting the resilience of the economy following Britain's vote to exit the European Union.

The report is the latest to paint an optimistic picture of the strength of the UK economy following the June 23 vote, helping provide a source of support for the pound, which has been tumbling as traders seek clarity on the form of Brexit that the UK will pursue. The stronger-than-forecast data, together with accelerating inflation, have damped speculation the Bank of England will cut interest rates and boost asset purchases, both of which tend to weaken a currency.

The pound rose 0.2 per cent to US$1.2319 as of 10:16 a.m. in London, after appreciating 0.9 per cent on Tuesday.It was trading at S$1.71.

UK government bonds were little changed before a sale of 2.5 billion pounds of gilts maturing in 2026. The yield on the 10-year securities was at 1.09 per cent on Wednesday, having reached 1.22 per cent on Monday, the highest since the EU referendum.

The bonds were sold at a yield of 0.685 per cent at the previous sale in September.