Sterling received a boost after an upbeat UK employment report that showed the jobless rate unexpectedly fell and private-sector earnings rose at their fastest pace in six years. This suggests that the economic recovery is picking up pace.
After the data was released at 08:30 GMT, the pound rallied to 1.5419 by 10:00 GMT, up from a pre-data low of 1.5329.
The ILO unemployment rate fell to 5.5% in the three months to July, compared to 5.6% in the three months to June. It was forecast to remain at 5.6%.
According to the Office of National Statistics, average weekly earnings rose by 2.9% in the three months to July, compared to a year ago, and in line with forecasts. This was the fastest growth rate for regular pay (excluding bonuses) since 2009 and is an encouraging sign, suggesting that the economic recovery is trickling down to Briton’s pay packets.
At 73.5%, the employment rate (the proportion of people aged from 16 to 64 who were in work) is the highest it has been for the three-months to July and was higher than the 72.8% a year earlier for the May-July 2014 period.
There were 31.09 million Britons in work, which was 42,000 more than from the February to April 2015 period and 413,000 more than from a year earlier.
There were 1.82 million unemployed people (people not in work but seeking and available to work), which was 198,000 fewer than a year earlier.
Today’s employment data provide yet more evidence that the UK labour market is in good health and this may put pressure on the Bank of England to start raising rates sooner. The Bank has held the base rate at 0.5% since March 2009. However, with headline inflation currently at zero, few expect BoE policymakers to raise interest rates until the second half of 2016.