Investing.com - The pound rose to session highs against the dollar and the euro on Wednesday after data showed that the U.K. unemployment rate unexpectedly fell to a four-and-a-half year low in October, fuelling hopes that the Bank of England will raise interest rates ahead of other central banks.
GBP/USD rose 0.57% to 1.6355, the strongest level since December 12, up from session lows of 1.6259.
Cable was likely to find support at 1.6259 and resistance at 1.6417, the high of December 12.
The Office for National Statistics said the U.K. unemployment rate fell to 7.4% in the three months to October, the lowest level since April 2009. Economists had expected the jobless rate to remain unchanged at 7.6%.
In August, the BoE said interest rates would remain on hold at record lows as long as the U.K. unemployment rate remains above 7%.
The number of people claiming unemployment benefits fell by 36,700 in November the ONS said, better than expectations for a decline of 35,000. October’s figure was revised to a drop of 42,800 people from a previously reported decline of 41,700.
Average earnings rose by 0.8% in the three months to October, and by 1.1% in October alone.
Meanwhile, the minutes of the BoE’s December meeting warned that further significant gains in sterling could put the U.K. economic recovery at risk.
"Any further substantial appreciation of sterling would pose additional risks to the balance of demand growth and to the recovery," the bank said.
Elsewhere, the euro dropped to one-week lows against the pound, with EUR/GBP dropping 0.69% to 0.8404.
The shared currency shrugged off a report showing that the Ifo German business climate index rose to a 20-month high of 109.5 in December, in line with forecasts and up from 109.3 in November.
Investors remained wary ahead of the outcome of the Federal Reserve’s final policy meeting of the year later in the trading day, with some expecting the bank to make a small reduction in the pace of its USD85 billion-a-month asset purchase program.
However, many believe that the bank will wait until early next year to start rolling back stimulus, despite recent indications the U.S. economic recovery is deepening.
GBP/USD rose 0.57% to 1.6355, the strongest level since December 12, up from session lows of 1.6259.
Cable was likely to find support at 1.6259 and resistance at 1.6417, the high of December 12.
The Office for National Statistics said the U.K. unemployment rate fell to 7.4% in the three months to October, the lowest level since April 2009. Economists had expected the jobless rate to remain unchanged at 7.6%.
In August, the BoE said interest rates would remain on hold at record lows as long as the U.K. unemployment rate remains above 7%.
The number of people claiming unemployment benefits fell by 36,700 in November the ONS said, better than expectations for a decline of 35,000. October’s figure was revised to a drop of 42,800 people from a previously reported decline of 41,700.
Average earnings rose by 0.8% in the three months to October, and by 1.1% in October alone.
Meanwhile, the minutes of the BoE’s December meeting warned that further significant gains in sterling could put the U.K. economic recovery at risk.
"Any further substantial appreciation of sterling would pose additional risks to the balance of demand growth and to the recovery," the bank said.
Elsewhere, the euro dropped to one-week lows against the pound, with EUR/GBP dropping 0.69% to 0.8404.
The shared currency shrugged off a report showing that the Ifo German business climate index rose to a 20-month high of 109.5 in December, in line with forecasts and up from 109.3 in November.
Investors remained wary ahead of the outcome of the Federal Reserve’s final policy meeting of the year later in the trading day, with some expecting the bank to make a small reduction in the pace of its USD85 billion-a-month asset purchase program.
However, many believe that the bank will wait until early next year to start rolling back stimulus, despite recent indications the U.S. economic recovery is deepening.