Investing.com - The pound slid lower against the dollar on Wednesday after the latest UK jobs report showed that wage growth is still lagging behind inflation, tempering expectations for an interest rate hike by the Bank of England.
GBP/USD was down 0.25% at 1.3155 by 05:22 AM ET (09:22 AM GMT) from around 1.3182 ahead of the data.
The Office for National Statistics said average earnings, including bonuses, rose by an annual 2.2% in the three months to August. Excluding bonuses, earnings rose by 2.1%.
Wage growth has steadily fallen behind inflation which rose 3% in September, its highest level in more than five years.
The rise in the cost of living, largely driven by the fall in the pound since last year’s Brexit vote, has caused a squeeze on household spending.
The employment report also showed that the UK unemployment rate held steady at 4.3% in the three months to August, the lowest level in 42 years.
Despite the slowdown in the UK economy so far this year the BoE has indicated that it expects to raise interest rates in the coming months so long as price pressures continue to increase and growth continues.
Some market watchers think the bank will hike rates form their current record low of 0.25% to 0.5% at its upcoming meeting in November, in what would be the first increase in borrowing costs in almost a decade.
But expectations for a rate hike diminished following dovish remarks by central bank policymakers on Tuesday.
The BoE’s new deputy governor indicated that he did not support the view that interest rates probably need to rise soon, and another official said her support for a rate hike was "very contingent on the data".
Sterling was a touch lower against the euro, with EUR/GBP at 0.8927 from around 0.8919 earlier.
In the euro zone, European Central Bank President Mario Draghi said Wednesday that political leaders have a “window of opportunity” to enact reforms to bolster growth, thanks to the euro zone’s current record low interest rates.