U.K. unemployment rate slips to lowest level in 5 years

Rate of unemployment in the U. K. tumbled to its lowest for five years, triggering speculation that the country's central bank could soon hike interest rates.

According to newly released official data, the country's headline unemployment rate slipped to 6.9 per cent quarter-on-quarter in the three months through February this year. The figure is below the 7 per cent threshold the Bank of England had set for a consideration for a hike in interest rates.

The number of unemployed people in the country slipped 77,000 in the quarter under review, bringing down the total number of jobless people to 2.24 million. The number of dole claimants fell 30,400 to 1.14 million in March. In the most recent three-month period, employment soared to 30.39 million. The rise was mainly driven by self-employment, which jumped by 146,000.

The fall in the rate of unemployment was steeper than analysts' average estimate. Analysts are now expecting the central bank to increase interest rates by April 2015; rather than May 2015.

Josh O'Byrne, a currency expert at Citigroup in London, said, "The unemployment data is pretty encouraging and we like sterling from here. This opens up the possibility that the Bank of England may need to raise interest rates sooner."

The Pound yesterday strengthened 0.38 per cent against the U. S. dollar to $1.6793 and gained 0.4 per cent against the Euro to _1.21.