By Morwenna Coniam and Gavin Finch Sept. 16 (Bloomberg) -- The pound traded near a four-month low against the euro as U.K unemployment rose to the highest level since 1995. The British currency also held near the lowest level in a week against the dollar. The number of people seeking jobs in the three months through July rose by 210,000 to 2.47 million, the Office for National Statistics said today. The pound tumbled yesterday after Bank of England Governor Mervyn King signaled it may cut the rate paid to hold reserves at the central bank. “The market had a shock yesterday and the data this morning was not strong enough to reverse the trend,” said Vincent Chaigneau, head of currency and interest-rate strategy at Societe Generale SA in London. “The data confirmed what King said yesterday, which is that we can pretty much rule out a strong recovery. It was a wake-up call for the market.” The pound dropped 0.1 percent to 88.98 pence per euro as of 10:49 a.m. in London, after weakening to 89.31 pence earlier, the lowest level since May 15. It climbed 0.1 percent to $1.6509. The unemployment rate in the three months through July rose to 7.9 percent, the most since 1996, the statistics office said. That compares with the latest figures of 9.5 percent in the euro region, 9.7 percent in the U.S. and 5.7 percent in Japan. The yield on the two-year gilt dropped 4 basis points to an all-time low of 0.71 percent. The yield on the 10-year bond dropped 2 basis points to 3.60 percent. The difference in yield, or spread, between the two securities widened to 287 basis points, near the most since at least January 1992.

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