Pound to US Dollar Exchange Rate today: GBP/USD hits 29-month high

Modified: Thursday, 23 January 2014 14:54 BST - Written by Toni Johnson

STORY LINK Pound to US Dollar Exchange Rate today: GBP/USD hits 29-month high

Pound Sterling surged to its highest level in 29-months against the US Dollar (GBP/USD) on Thursday after the currency was buoyed by yesterday’s unemployment data which showed that the number of Britons out of work declined to 7.1%, closer to the Bank of England’s target of 7%.

The report beat economist expectations for a figure of 7.4% and led to investors raising their expectations for the BoE to raise interest rates at its next policy meeting. If it does raise rates then the BoE will be the first major global bank to do so and could spur others to follow suit.

"It was now likely that the unemployment rate would reach the 7% threshold materially earlier than previously expected," the minutes said, but officials "saw no immediate need to raise Bank Rate," the bank’s benchmark interest rate, "even if the 7% unemployment threshold were to be reached in the near future."

The report showed that unemployment dropped by 167,000 to 2.32 million in the three months through November compared with the previous figure. The decline is the biggest drop recorded since October 1997 and is the second largest fall since records began in 1971.

As a result of the data release Sterling surged against the Euro, Australian Dollar, Canadian Dollar and many others.

The US Dollar could regain some ground later in today’s session if initial jobless claims and manufacturing PMI data comes in strongly. The Euro found support earlier in the session after a report showed that manufacturing increased in Germany by a bigger than expected level. The wider Eurozone also saw services, manufacturing and its current account all beat forecasts.

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