Wages rising for first time in a year

Zhang Ming the Chinese ambassador to the EU | Safin Ahmed  AFP via Getty Images

Zhang Ming the Chinese ambassador to the EU | Safin Ahmed AFP via Getty Images

"I don't think this will change expectations about the May rate hike, but the way the pound fell after the data was released shows that the market is long on sterling, hedge funds in particular", said Jordan Rochester, an FX strategist at Nomura.

-GBP dips but GBPUSD close to post Brexit high, GBPEUR a 1 year high.

Unemployment figures, also released today, fell to a new post-1975 low of 4.2 per cent in February, down from 4.3 per cent in the previous month.

Wage growth rose to 2.8% in the three months to February, outstripping inflation for the first time in a year, official figures show. But Shaw said a pickup in growth in pay excluding bonuses to 2.8 percent from 2.6 percent in the three months to January - in line with the Reuters poll and the strongest reading since early 2015 - would give a green light to the BoE to raise rates. This saw the Pound-to-Dollar rate quoted 0.04% lower at 1.4336, marking a reversal of an earlier 0.22% gain, while the Pound-to-Euro rate traded 0.11% lower at 1.1567.

"The pound was the standout performer yesterday and is now the best performing G10 currency versus the USA dollar on a year-to-date basis".

However, inflation over the period using a slightly different measure preferred by the Bank of England - CPI - was an average 2.9%, still slightly ahead of wage increases.

THE POUND has risen to the highest level against the dollar since the Brexit vote - in a huge vote of confidence for Britain as we enter trade talks within weeks.

He said that renewed risk appetite and continued dollar weakness had helped to keep the pound strong despite weaker-than-expected economic data this month.

Halpenny suggests Sterling's rise against the Euro is an indication that the currency is now appreciating based on its own merits, rather than the weakness of other currencies. Inflation over the period, as measured by the consumer price index, was around 2.9 percent.

Last November the Bank of England hiked rates from 0.25 per cent to 0.5 per cent, and there are signs that another hike could be on the cards again soon - possibly as soon as May.

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