Pound Rises On Strong U.K. Wage Data

(RTTNews) - The British pound strengthened against other major currencies in the European session on Tuesday, after the release of solid U.K. wage report from three months to February.

The optimistic wage data is likely to improve expectation on the Bank of England to raise further interest rate by 25 basis point.

Data from the Office for National Statistics showed that the U.K. average earnings including bonuses increased 5.9 percent in three months to February. Earnings were forecast to grow 5.1 percent. Excluding bonuses, earnings increased 6.6 percent from a year ago, as expected.

The unemployment rate rose slightly to 3.8 percent in three months to February from 3.7 percent in the preceding period. Economists expected to show that unemployment held steady at 3.7 percent in February. Investor sentiment improved amidst positive sentiment generated by China's GDP surprise. Lingering concerns over inflation, interest rates as well as growth, and the health of the corporate sector as indicated by the earnings updates are expected to drive sentiment as trading progresses.

The pound showed mixed trading against its major rivals in the Asian session. While the pound held steady against the euro, the U.S. dollar and the Swiss franc, it fell rose against the yen.

In the European trading today, the pound rose to nearly a 4-month high of 166.97 against the yen, from an early low of 166.16. The next possible resistance target for the pound is seen around the 168.00 area.

Against the euro and the U.S. dollar, the pound advanced to 4-day highs of 0.8817 and 1.2439 from early lows of 0.8833 and 1.2366. If the pound extends its uptrend, it is likely to find resistance around 0.87 against the euro, and 1.25 against the greenback.

The pound advanced to a 5-day high of 1.1158 against the Swiss franc, from an early low of 1.1094. On the upside, 1.14 is seen as the next resistance level for the pound.

In the New York session, Canada CPI data for March, U.S. housing starts and building permits data for March are due to be released.