Forex – Sterling Retreats on Soft UK Wage Growth Data


© Reuters. Sterling retreats on soft UK wage growth data

Investing.com – The pound retreated on Wednesday, pulling back from one-year highs against the dollar after the latest UK employment report showed that wage growth remained sluggish, adding to fears over a squeeze on living standards.

GBP/USD was trading at 1.3273 by 05:13 AM ET (09:13 GMT), down from around 1.3329 earlier.

The UK unemployment rate fell to 4.3% in the three months to July, from 4.4% a month ago, the Office for National Statistics reported. It was the lowest since 1975.

The number of people in work rose to a record high of 32.136 million, but wage growth was weaker than expected.

Average weekly earnings rose by just 2.1% from a year earlier. Economists had forecast a rise of 2.3%.

Excluding bonuses, wage growth was also 2.1%, against expectations of a 2.2% rise.

The report came a day after data showing the annual rate of inflation in the UK jumped to 2.9% in August, its joint highest in five years.

With inflation outstripping pay growth the squeeze on the cost of living is getting worse, which will likely deter the Bank of England from raising interest rates.

The BoE is to hold its next policy meeting on Thursday.

Sterling also gave up gains against the euro, with EUR/GBP climbing 0.19% to 0.9025, pulling away from the one-and-a-half month low of 0.8983 hit earlier in the day.

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