Investing.com - The pound spiked to the day’s highs on Tuesday before turning lower after UK jobs data showing that the unemployment rate remained steady at 42-year low but the squeeze on wages continued.
GBP/USD initially hit a high of 1.3212, up from around 1.3197 ahead of the report before pulling back to 1.3153 by 05:03 AM ET (10:03 AM GMT).
The unemployment rate in the three months to the end of September was unchanged at 4.3%, in line with economists’ expectations.
The number of people in employment fell for the first time in almost a year. There were 32.06 million people in work in the three months to September, a 14,000 drop on the previous quarter.
It was the first drop since the three months to the end of October 2016 and the biggest decline since the three months to the end of June 2015.
The Office for National Statistics said average weekly earnings including bonuses rose by an annual 2.2% in the three months to September, compared with an upwardly revised 2.3% in the period to August.
Economists had expected wage growth of 2.1%.
Excluding bonuses - which analysts say gives a better picture of the underlying trend – wages rose by 2.2% year-on-year, unchanged from the previous period and in line with forecasts.
That still leaves wages lagging behind inflation - which ran at a five-year high of 3.0% in September and October.
The Bank of England is watching wage growth closely as it gauges whether the increase in inflation is creating longer-lasting pressure on prices. It expects wages to rise by 2.0% this year before picking up in 2018 and 2019.
Sterling was at one-month lows against the stronger euro, with EUR/GBP up 0.4% at 0.8997 from around 0.8974 earlier.
Demand for the euro continued to be underpinned after solid euro zone growth data on Tuesday offered further evidence that the region’s economic recovery remains on track, supporting the European Central Bank's move to begin reducing its bond-buying program.
Last month the ECB it would keep its bond buying program in place late into next year but reduce the size of its monthly purchases, a policy shift signaling it is on track to eventually raising interest rates.