The pound rose against the dollar for the second consecutive week as reports filtered in that the U.K. unemployment rate surprisingly fell under 7 percent, which is the point at which the Bank of England is expected to mull hiking interest rates.
The sterling hit its strongest level against the U.S. currency in more than four years and touched the highest point in six weeks against the euro on the strong labor market report. The pound also gained against the dollar after Federal Reserve Chair Janet Yellen hinted that she intends to maintain the current monetary policy until the economy improves sufficiently.
The pound was up 0.3 percent to $1.6787 as of 4:20 p.m. London time on Friday after earlier touching $1.6842 on April 17, its strongest level since November 2009. The pound advanced 0.8 percent to 82.31 pence a euro after earlier touching a high of 82.15 pence on Thursday, a six-week high (since March 6).
“Strong employment numbers have boosted the pound,” Neil Jones, a London-based head of European hedge-fund sales at Mizuho Bank Ltd told Bloomberg. “The U.K. will be the first major economy to raise interest rates. The pound has also benefited from a weaker U.S. dollar after Yellen’s comments.”
The Office for National Statistics reported on Wednesday that unemployment rate plunged to 6.9 percent in the quarter through February, compared to 7.2 percent in the three months through January. This exceeded the median estimate of a fall to 7.1 percent in a Bloomberg survey of economists.
The sterling has advanced 5.4 percent over the last six months, making it the best performing currency among the 10 advanced-economy currencies monitored by Bloomberg Correlation-Weighted Indexes as investors bet the central bank will hike interest rates soon. The dollar rose 1 percent while the euro advanced 2.1 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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