LONDON (Reuters) - The pound retreated from recent 3-1/2 month highs against the dollar on Wednesday after data showed the number of Britons out of work jumped by the largest amount since 1992 in a deepening economic downturn.
The Office for National Statistics said claimant count unemployment rose by 15,500 last month after an upwardly revised 14,300 increase in May.
Policymakers have been grappling with the dual difficulties of slowing growth and rising prices — as highlighted in figures on Tuesday that showed the annual inflation rate soaring to 3.8 percent, nearly double the Bank of England’s 2 percent target.
“The rise in the claimant count is the biggest in more than 15 years. While not vastly different from what was expected, it is a sign of things to come over the next year as the economy weakens,” Investec economist Philip Shaw said.
By 2:48 p.m., sterling had fallen 0.3 percent against the dollar to trade at $1.9991, retreating from Tuesday's 3-1/2 month high at $2.0153 GBP=.
The euro was up 0.1 percent at 79.42 pence EURGBP=.
Sterling’s losses were extended as the dollar gained broadly, clawing back from Tuesday’s record low versus the euro, after earnings from U.S. bank Wells Fargo (WFC.N) beat expectations and raised optimism in the U.S. financial sector.
Later on Wednesday, new Bank policymaker Spencer Dale will face routine questioning from parliament’s Treasury Select Committee.
Reporting by London Markets Team; Editing by Ruth Pitchford