Pound reached year high against euro

<p>New jobs data has been a boost for the pound today.</p>

The pound has grown in value to a new year high against the euro today (January 22nd), boosted by the latest unemployment statistics released for the UK.

Data from the Office for National Statistics (ONS) revealed today that the unemployment rate for September to November 2013 was 7.1 per cent of the economically active population, which was down 0.5 percentage points from June to August 2013.

That means unemployment in the UK is now at its lowest point in around five years, providing another indication that the country's economy is bouncing back strongly from the global financial crash. The International Monetary Fund recently increased its growth forecast for the UK economy as well.

Sterling was up across the board today, improving against all but one of the other major global currencies, with speculation growing that the Bank of England's Monetary Policy Committee will therefore look to amend interest rates soon.

Interest rates

The UK's base rate of interest has stood at 0.5 per cent since March 2009 and the Bank of England previously said it would not consider a rise at all until unemployment was down to the target rate of seven per cent.

However, governor of the Bank Mark Carney said the seven per cent landmark would not be an automatic landmark. With inflation in the UK down to 2.1 per cent – slightly above the government's target of two per cent – a rise in interest rates could be on the cards soon.

Thomas Kressin, head of European foreign-exchange at Pacific Investment Management Co in Munich, told Bloomberg that he believes economic indicators are currently stacked in favour of further improvements to sterling."

"Given the relative strong cyclical performance of the U.K. economy, sterling currently appears to be the most attractive currency in the G-4," he added, with G-4 currencies including the dollar, euro, pound and yen.

The ONS data also showed that the inactivity rate for people aged from 16 to 64 for September to November 2013 was 22.2 per cent, which was down 0.1 percentage points from June to August 2013, while total pay and regular pay rose by 0.9 per cent between October to December 2012 and October to December 2013.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.