Pound Drops As U.K. Wage Growth Slows

The pound dropped against its major counterparts in the early European session on Wednesday, erasing early gains, as the U.K. wage growth slowed more than forecast in the three months to July.

Data from the Office for National Statistics showed that average earnings including bonus climbed 2.1 percent from the previous year, slower than the expected rate of 2.3 percent.

Excluding bonuses, wage growth came in at 2.1 percent, compared to a 2.2 percent rate estimated by economists.

Nonetheless, the jobless rate fell to 4.3 percent, the lowest since 1975. Economists had forecast the rate to remain unchanged at 4.4 percent.

There were 1.46 million unemployed people in May to July period, down by 75,000 from three months to April.

The employment rate came in at 75.3 percent, the highest since records began in 1971.

The Bank of England announces its monetary policy decision on Thursday, with economists widely forecasting the key rate to remain unchanged at 0.25 percent and the asset purchase program at GBP 435 billion. Recent overshoot of inflation has intensified speculation that BOE may adopt a more hawkish tone at the upcoming meeting.

European shares are mixed, as investors moved to the sidelines awaiting further clarity over North Korea and U.S President Donald Trump's tax reform bill.

The currency was higher against its most major counterparts in the Asian session, as yesterday's strong inflation data added to hopes that the BoE may raise interest rates sooner than previously expected.

The pound dropped to 0.9029 against the euro, after having advanced to 0.8983 at 3:00 am ET. Continuation of the pound's downtrend may see it challenging support around the 0.91 region.

Figures from Destatis showed that Germany's wholesale prices increased at the sharpest pace in four months in August.

Wholesale prices grew 3.2 percent year-over-year in August, faster than the 2.2 percent climb in July.

The U.K. currency retreated to 1.3275 against the greenback, following a 1-year high of 1.3329 set at 3:00 am ET. If the pound extends decline, 1.31 is possibly seen as its next support level.

Having advanced to near a 6-week high of 1.2793 against the franc early in the session, the pound reversed direction and eased to 1.2734 after the release of the data. On the downside, 1.26 is likely seen as the next support for the pound.

Data from the Federal Statistical Office showed that Switzerland's producer and import prices rose more than forecast in August.

Producer and import prices increased 0.6 percent year-on-year in August, faster than economists' forecast of 0.4 percent.

The pound reversed from an early nearly 6-week high of 146.66 against the yen, edging lower to 145.94. The pound is poised to find support around the 145.00 mark.

Data from the Bank of Japan showed that Japan's producer prices were flat on month in August.

That was shy of expectations for an increase of 0.1 percent following the 0.3 percent gain in July.

Looking ahead, U.S. producer prices and monthly budget statement for August are due in the New York session.