Market flat, but jobs data boosts sterling
A drop in Britain's unemployment rate sent the pound sharply higher yesterday amid mounting expectations that interest rates will rise sooner than predicted.
Official figures showed unemployment falling to 2.49 million in the three months to July, while the closely-watched jobless rate eased to 7.7% from 7.8%, putting pressure on the Bank of England's pledge to hold rates at their record low until the unemployment rate falls to 7%.
As investors bet on rates rising before the bank's 2016 guidance, sterling leapt to a seven-month high against the US dollar and a nine-month record on the euro – at 1.58 dollars and 1.19 euros – although the FTSE 100 Index failed to gather momentum, edging 4.4 points higher to 6588.4.
Chip designer ARM Holdings was at the top of the FTSE 100 risers board as it benefited from excitement over the launch of Apple's iPhone 5S, which has the first mobile application processor to use ARM's v8 64-bit design. The Cambridge-based company's shares rose 45.5p to 986.5p, a gain of 5%.
But Apple was suffering reverse fortunes on Wall Street, down almost 6% in early trading due to fears that its new cheaper model will still be too costly for many buyers in emerging markets.