The pound strengthened to a seven-month high against the dollar after a government report showed unemployment unexpectedly declined, adding to signs the U.K. economy is gaining momentum.
Sterling climbed to the strongest since January versus the euro as the jobless rate moved toward the 7 percent threshold at which the Bank of England said it will reassess it policy of keeping interest rates low. Central bank Governor Mark Carney along with fellow policy makers Paul Fisher, David Miles and Ian McCafferty will testify to parliament tomorrow. U.K. government bonds were little changed after benchmark 10-year yields climbed to the highest level in two years.
“The pound is likely to maintain its recent momentum in the near term,” said Peter Kinsella, a senior currency strategist at Commerzbank AG in London. “It will probably take another two years before the unemployment rate drops to the 7 percent target. Still, a decline in jobless claims will no doubt help in terms of sentiment.”
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