James Knightley, Research Analyst at ING, notes that the UK labour report is mixed with job creation coming in a little lower than expected at 116,000 in the three months to January versus the consensus forecast of 144,000 and the previous figure of 205,000. Key Quotes “With the number of people classified as unemployed dropping 28,000, this leaves the unemployment rate at 5.1%. Pay picked up a little more than anticipated, the 3M average excluding bonuses coming in at 2.2%YoY versus 2.0% last month. We suspect that the rate of job creation will slow in the lead up to the EU referendum in June as the economic uncertainty it brings makes businesses more cautious. Job vacancies fell 10,000, which may offer an early hint of this. Nonetheless, the labour market remains tight with more job vacancies (768,000) than people claiming unemployment benefits (716,700). As such, if the UK votes to remain in the EU and the uncertainty clears we would expect pay rates to continue trending higher, which could be the catalyst for higher interest rates before the end of this year. However, if the UK votes to leave the shock that this would create and the intensifying uncertainty would likely mean policy stimulus from the Bank of England.” For more information, read our latest forex news.