UK gilts slump after July employment report cheers investors; BoE policy decision in focus

The United Kingdom’s gilts slumped during European session Tuesday after the country’s employment report for the month of July cheered market participants. Investors will now remain focussed on the Bank of England’s (BoE) monetary policy decision, scheduled to be unveiled on September 12 by 11:00GMT.

The yield on the benchmark 10-year gilts, jumped 3-1/2 basis points to 1.503 percent, the super-long 30-year bond yields surged nearly 2-1/2 basis points to 1.850 percent and the yield on the short-term 2-year also traded nearly 3-1/2 basis points higher at 0.76 percent by 08:45GMT.

According to data released by the Office for National Statistics (ONS), Britain’s unemployment rate remained unchanged at 4 percent during the month of July, meeting market expectations as well. However, the number of employed people rose 3,000 during the period, compared to expectations of 27,000, compared to previous reading of 42,000.

Further, the claimant count, measuring the change in the number of people claiming unemployment benefits rose 8,700 in August from 10,200 in the three months to July, revised from an initial reading of 6,200. Economists had forecast an increase to 10,000. Average earnings, excluding bonuses, rose by an annual 2.9 percent in the three months to July, above market anticipations for a rise of 2.8 percent and faster than the 2.7 percent seen in the previous month.

Meanwhile, the FTSE 100 slipped 0.43 percent to 7,248.04 by 08:55GMT, while at 08:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bullish at 126.37 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex