© Reuters. FILE PHOTO: British five pound banknotes are seen in this picture illustration taken November 14, 2017. REUTERS/ Benoit Tessier/Illustration

By Joice Alves

LONDON (Reuters) – The pound rose on Tuesday as data showed British employers hired more people in October after the government’s job-protecting furlough scheme ended, easing some of the Bank of England concerns about the risks of raising interest rates.

Fears of a slowdown in the jobs market, following the end of the furlough scheme on Sept. 30, prompted the BoE to surprise the market and keep rates on hold at its latest meeting, when sterling had its deepest fall versus the dollar in 14 months.

In early London trading, sterling rose after data showed the number of staff on businesses’ payrolls in Britain rose by 160,000 in October versus the month before to 29.3 million, 0.8% higher than in February 2020 before the pandemic hit, based on data from tax authorities.

Versus the dollar, sterling rose 0.4% to $1.3467 at 0930 GMT, after touching a 11-month low on Friday. It also rose 0.4% against the euro to 84.38 pence.

“It (the job data) suggests that the roughly one million people that were on the furlough scheme at the end of September have largely returned to work,” UniCredit analysts said.

BoE Governor Andrew Bailey said that his vote to keep interest rates on hold earlier this month had been a very close call. The lack of official data about what had happened to workers who were still on furlough when the scheme ended had made him want to wait.

“Given the lack of evidence of a slowdown in today’s strong jobs data, the case for a December 15bp hike is now stronger, and markets are almost fully pricing in such a move,” ING told clients.

The BoE could be the first major central bank to raise interest rates, but whether that initial increase comes as soon as next month or early next year has divided economists polled by Reuters.

In the meantime, capping sterling gains, there are worries that disagreements between Britain and the European Union over Northern Ireland could trigger major trade disruption, hitting the British economy, which is lagging that of other rich nations.

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