Economics / Markets

SECTOR REPORT

PA PORTFOLIO

Confidence among investors that the Bank of England (BoE) will hold rates at record lows for as long as it has implied appears to be falling after a key economic indicator suggested the UK's economic recovery is gathering pace.

Sterling has risen to a seven-month high against the dollar after the UK's unemployment rate unexpectedly dipped from 7.8% to 7.7%.

A senior European Central Bank(ECB) policymaker has issued a fresh warning that the impact of the US Federal Reserve reducing its massive stimulus programme might exceed that of 1994.

The UK unemployment rate fell 0.1% in the three months to July to 7.7%, according to the Office for National Statistics.

The future of the UK economy may not be as bright as some have predicted, with the weakest recovery in "industrial history" limiting annual growth to 1% in the longer term, according to a thinktank.

The extent of a widely-reported drop in confidence in the banking system has been highlighted by an independent study charting social attitudes over the last 30 years.

Asian stocks have soared, led by Japan's Nikkei, as investor confidence was boosted by Tokyo winning the race to host the 2020 Olympics.

The economy is "turning a corner", Chancellor George Osborne is expected to say later today.