The economic picture continues to look up for the UK economy after the latest employment report from the ILO for the three month period to June showed that unemployment came in unchanged at 7.8%. Delve a little deeper though and the monthly rate for June fell to 7.4%. Given that monthly jobless claims have fallen over the months of June and July by a combined 58.6k the likelihood remains high that the July monthly number could well come in at around the same level as the June one at 7.4%. This would bring the three month ILO average down from the current 7.8% to 7.6% and as such cast doubt on the Bank of England's ability to anchor interest rate expectations at current levels. Next month's ILO unemployment number could well prove to be a significant test of the Bank's ability to keep rate expectations down. This has already been reflected in the UK gilt market this morning with yields on the 2 year pushing to one month highs, before slipping back to trade slightly higher at 0.44% while 5 year rates are at 1.55%, continuing to edge back towards their June highs at 1.672%. Part of this jump can also be attributed to MPC member Martin Weale dissenting against the time frame for the forward guidance, though not on the guidance itself. Mr Weale is concerned about the ability to anchor rate expectations for such a long period of time, and given today's improvement in the unemployment data he may have a point. The pound has also jumped sharply against the US dollar and the euro, but needs to get above the 1.5520 area and below the 0.8530 area to signal further gains. While today's data is certainly good for the UK economy it makes the Bank of England's job that much more difficult at a time when economic data looks fairly robust and bond yields on the other side of the Atlantic are also nudging higher, as the Fed tapering debate continues to gain traction. With Fed President James Bullard due to speak later this afternoon Mr Carney will no doubt be helping that the FOMC members look to play down rate rise expectations and taper timing as much as possible. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person