Pound Rises On Robust U.K. Wage Growth

The British pound strengthened against other major currencies in the European session on Tuesday, after the U.K. labor market data for the three months ending October showed robust wage growth, signaling that the Bank of England will hold off cutting interest rates on Thursday.

Data from the Office for National Statistics showed that the unemployment rate held steady at 4.3 percent during August to October period. The rate came in line with expectations.

Excluding bonus, annual growth in average earnings came in at 5.2 percent compared to economists' forecast of 5.0 percent. Earnings including bonus also grew 5.2 percent, which was faster the forecast of 4.6 percent.

Further, data showed that vacancies decreased on the quarter for the 29th consecutive period. The estimated number of vacancies fell 31,000 on the quarter to 818,000 in September to November.

Investors looked ahead to a slew of major central bank decisions later in the week and watched closely the latest political developments in Germany and France.

The U.S. Federal Reserve will announce its last move on interest rates for the year on Wednesday and it is likely that the main rate will be cut for a third straight time.

In the European trading today, the pound rose to more than a 4-1/2-month high of 1.1395 against the Swiss franc, a 5-day high of 1.2707 against the U.S. dollar and a 4-day high of 0.8258 against the euro, from early lows of 1.1332, 1.2666 and 0.8296, respectively. If the pound extends its uptrend, it is likely to find resistance around 1.14 against the franc, 1.28 against the greenback and 0.81 against the euro.

Against the yen, the pound edged up to 195.91 from an early low of 195.10. The pound may test resistance around the 199.00 region.

Looking ahead, Canada CPI data for November, new housing price index for November, U.S. retail sales data for November, industrial and manufacturing production data for November, business inventories for October and U.S. NAHB housing market index for December are set to be released.