GBP/INR has extended its gains in early trading on Tuesday, after gaining over 0.70% on Monday. Currently, one British pound buys 92.709 Indian rupees, up 0.46% as of 7:05 AM UTC. The pair has managed to recover some losses after falling continually since mid-April.
The pound reacted positively on the latest labor market data. The Office for National Statistics (ONS) said that the unemployment level in the UK declined to 3.9% in the three months to March from 4.0% in the three months to February, though it covered only one week of lockdown. Analysts expected an increase to 4.4%.
Employment increased by 211,000 in the first quarter of 2020, while analysts expected modest growth of 50,000.
UK’s Claimant Count Surges More than Expected
However, despite the positive aspects of the latest ONS report, there are many concerns related to the lockdown measures implemented to fight the pandemic.
The number of UK citizens claiming jobless benefits surged to the highest level in 14 years last month. The claimant count was up by 856,500 to 2.097 million. That represents a 69% increase, which is the biggest monthly surge on record. Analysts surveyed by Reuters anticipated a leap of 676,500 on average.
It seems that the claimant count could surge by a larger figure if not the government programme to pay 80% of the salaries of those who had been put on temporary leave by their companies.
Jonathan Athow of ONS concluded:
“While only covering the first weeks of restrictions, our figures show COVID-19 is having a major impact on the labour market.”
The UK’s Office for Budget Responsibility (OBR) said that the unemployment rate could surge to 10% in the second quarter of this year, even if there are millions of workers who get paid thanks to the government’s scheme to support those who are temporarily laid off.
However, even such a high figure pales in comparison with India’s unemployment, which maintained at 24% in the week ended May 17. The labour participation rate increased from 35.4% for the week ended April 26 to the current level of 38.8%. Industries are gradually reopening, the Centre for Monitoring of Indian Economy says.