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%.
The figures, released this morning by the Office for National Statistics, beat expectations that the headline rate would remain unchanged.
With the Bank of England having said earlier this summer it would consider raising interest rates once unemployment fell to 7%, sterling strengthened to $1.5824 against the dollar on today's news.
That represented the highest level in dollar terms since February. Sterling also rose to an eight-month high against the euro of €1.1925.
The rise was accompanied by a further jump in benchmark gilt yields, with ten-year yields rising to 3.04%, an eight-month high, before subsequently falling back marginally.
The latest figures will increase expectations the Bank will raise rates sooner than expected, despite its ongoing insistence that any rises remain several years away.
RBS economists said the solid data "will bolster financial market expectations for the first hike in Bank rate to come much sooner than the City economist consensus (Q1 2016)."
But some still remain sceptical about an impending rate rise. Capital Economics' UK economist Martin Beck said he doubted the news "significantly increases the chances of interest rates rising sooner rather than later".
"Although employment rose strongly, more timely evidence from the recent activity surveys suggests that firms are responding to higher demand more by boosting productivity than taking on new workers," he added.
Consistency and compliance vs. slower reaction time
Search for replacement to begin imminently
60+ £300bn ISA savings
Has technology moved on?
Total funds on list rise from 26 to 58