Sterling rose against the dollar and recovered from a seven-week low versus the euro on Wednesday as selling on a rise in UK jobless claims fizzled out as the market focused on an increase in employment. Market participants said a speech by Bank of England Governor Mervyn King gave no hints that more quantitative easing was coming soon to help the fragile economy, and offered a chance for investors who have been short on the pound to trim those positions.
Sterling initially fell to 84 pence per euro, its weakest since late July, after data showed the number of people claiming UK unemployment benefit rose by 2,300 in August. By 1511 GMT, sterling had risen 0.5 percent on the day to $1.5640, its highest in nearly a month, recovering from a slide to $1.5449 hit in the lead-up to the jobs data. Traders said the pound's upward momentum accelerated after stops were triggered above $1.5570. The euro slipped 0.3 percent to 83.32 pence.
The pound jumped 3.3 percent to 133.95 yen as cross yen pairs soared after Tokyo intervened for the first time in six years to rein in yen gains, but traders doubted Japan bought anything other than dollars in the move. Sterling has risen against the dollar since the start of the week, but many in the market expect further gains will require signs the UK economy is recovering significantly.
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