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Pound Climbs As U.K. Wage Growth Accelerates To Decade High


The pound spiked up against its major counterparts in the European session on Tuesday, after data showed that U.K. wages grew at the fastest pace in a decade in the three months to November and the jobless rate fell to its lowest level since 1975, indicating a tightening labor market despite Brexit uncertainty.

Data from the Office for National Statistics showed that average earnings including bonus accelerated to 3.4 percent year-on-year, which was the biggest since May to July period of 2008. Economists had forecast a 3.3 percent increase.

Excluding bonuses, average pay increased 3.3 percent, the fastest increase since September to November 2008.

Employment grew by 141,000 from the three months to August to 32.53 million, while economists were looking for an increase of 87,000.

The employment rate was at an all-time high of 75.8 percent, which was the joint-highest estimate since comparable estimates began in 1971.

The number of unemployed was 1.37 million in the three months to November, almost flat with the three months ended August.

The ILO jobless rate fell to 4.0 percent from 4.1 percent in three months to August. That was the lowest level since 1975.

Separate data showed that UK budget deficit for December exceeded economists' expectations and was the second lowest figure for the month in 18 years.

The public sector net borrowing, or PSNB, was GBP 3 billion in December, which was GBP 0.3 billion more than a year ago. Economists had forecast borrowing of GBP 1.9 billion.

The currency fell against its most major counterparts in the Asian session, as most Asian shares declined amid worries about global economic growth after the International Monetary Fund cut its global growth forecasts.

The pound added 0.4 percent to hit a 4-day high of 0.8791 against the euro, following a decline to 0.8829 at 3:15 am ET. The pair was valued at 0.8815 when it ended deals on Monday. On the upside, 0.86 is likely seen as the next resistance for the pound.

Survey data from the ZEW - Leibniz Centre for European Economic Research showed that Germany's investor confidence improved further at the start of the year to its highest level in four months, defying expectations of weakening.

The ZEW Indicator of Economic Sentiment for Germany rose to -15.0 points from -17.5 in December. Economists had forecast the index to ease to -18.5.

The pound appreciated to a 4-day high of 1.2886 against the franc, up by 0.5 percent from a low of 1.2824 hit at 3:15 am ET. At Monday's close, the pair was worth 1.2853. If the pound rises further, 1.30 is possibly seen as its next resistance level.

After falling to a 5-day low of 140.63 versus the yen at 3:00 am ET, the pound reversed direction and touched a session's high of 141.54. The pound-yen pair finished Monday's trading at 141.36. The pound is likely challenge resistance around the 144.00 level.

The U.K. currency firmed to a 4-day high of 1.2928 against the greenback, from a low of 1.2855 touched at 2:30 am ET. The pound was trading at 1.2891 a greenback at Monday's close. Next key resistance for the pound is possibly seen around the 144.00 level.

Looking ahead, Canada wholesale sales for November and U.S. existing home sales for December are scheduled for release in the New York session.

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