The pound rose to the days highs against the dollar on Wednesday after the latest UK jobs report showed that the unemployment rate fell to its lowest since 1975 while wage growth ticked up.
GBP/USD touched a high of 1.2904 and was at 1.2892 by 05.31 a.m. ET (09.31 a.m. GMT).
The unemployment rate in the three months to June fell to 4.4% the Office for National Statistics said, against forecasts for it to remain unchanged at 4.5%.
Average weekly earnings rose by 2.1% year on year in the three months to June, better than economists forecast for an increase of 1.8% and up from 1.9% in the three months to May.
Excluding bonuses, earnings also rose by 2.1%, slightly better than forecasts of 2.0%.
The report came a day after figures showing that the annual rate of inflation in the UK unexpectedly held steady at 2.6% in July.
With inflation continuing to outstrip wage growth households are facing a squeeze on living standards.
The steep drop in sterling since last year’s Brexit vote has made imports more expensive.
In its latest assessment of the economy released last week, the Bank of England said it expected inflation to peak at 3% in October and cut its forecast for wage growth.
BoE Governor Mark Carney warned that “an element of Brexit uncertainty” was preventing firms from awarding bigger wage increases.
Elsewhere, sterling was higher against the euro, with EUR/GBP down 0.16% at 0.9102.
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