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British pound rises on strong labour data

The British pound on Wednesday rose sharply against the dollar after a big drop in unemployment boosted sentiment that the Bank of England could raise interest rates before other central banks.

NEW YORK: The British pound on Wednesday rose sharply against the dollar after a big drop in unemployment boosted sentiment that the Bank of England could raise interest rates before other central banks.

Near 2200 GMT Wednesday, the pound bought $1.6569, up from $1.6476 on Tuesday.

The euro fell to 0.8173 British pounds from 0.8229.

The dollar meanwhile rose slightly against some other major currencies.

The euro traded at $1.3544, down from $1.3559.

The dollar advanced to 104.54 Japanese yen from 104.32.

And the greenback rose to 0.9115 Swiss franc from 0.9100.

Britain's Office for National Statistics (ONS) said unemployment in the three months to the end of November fell to 7.1 percent from 7.4 percent in the quarter to the end of October.

The Bank of England has stated that it will consider raising its key interest rate from a record-low 0.50 percent once the unemployment rate falls to seven percent.

Minutes from the central bank's January policy meeting said unemployment was "now likely to reach the seven percent threshold materially earlier than previously had been expected."

But the BoE also cautioned that it saw "no immediate need" to raise its base rate "even if the seven percent unemployment threshold were to be reached in the near future."

In spite of the caveat, the British pound rose sharply next to other currencies, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

"The view that the BoE will be the first major central bank to begin raising lending rates should keep the pound well supported," Esiner said.

Following the unemployment data, Citibank said it now expects a rate rise before the end of 2014.

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