In the early European session on Wednesday, the pound strengthened against most major currencies following a report showing that country's jobless claims unexpectedly declined in December.
The latest figures from the Office for National Statistics showed that the number of jobless claims or the claimant count declined by 12,100 from a month earlier to 1.56 million in December. Economists expected an increase of 500 claimants.
The claimant count rate was unchanged at 4.8 percent as expected. At the same time, the ILO measure of the unemployment rate fell marginally to 7.7 percent in the September-November period from 7.8 percent in June-August.
In a much-awaited speech in London, British Prime Minister David Cameron said today that he is in favor of a referendum on the UK's membership of the European Union, but insisted that he does not want the country to drift towards an EU exit.
Cameron promised to hold an in/out referendum on EU membership by the end of 2017, if re-elected. Cameron said the next Conservative manifesto in 2015 will ask for a mandate from the British people for a Conservative Government to negotiate a new settlement with the European partners in the next Parliament.
Bank of England policymakers voted 8-1 to maintain the size of quantitative easing at GBP 375 billion, the minutes of the meeting showed today. David Miles sought an increase of GBP 25 billion to GBP 400 billion.
The Monetary Policy Committee unanimously decided to retain the record low 0.50 percent interest rate.
The pound is now trading at 140.29 against the yen, reversing from early 3-week low of 139.30. If the pound extends gain, it is likely to break 143.00 level.
The Japanese government upgraded its assessment of the economy for the first time in eight months today, saying that it is showing some signs of bottoming out.
"While the Japanese economy shows weakness recently due to deceleration of the world economy, signs of bottoming out can be seen in some areas," the Cabinet Office said in its monthly economic report.
The British pound recovered from near a 5-month low of 1.5805 against the greenback and the pair is worth 1.5871. The pound may face next resistance level at 1.595.
The pound strengthened to 1.4763 against the franc from early 8-1/2-month low of 1.4689. On the upside, 1.48 is seen as the next target level for the pound. The pair closed yesterday's trading at 1.4723.
The Eurozone flash consumer sentiment index for January and U.S. house price index for November are due in the North American session.
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