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.
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.
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