LONDON: Sterling on Tuesday rose to its highest level since Britain voted to leave the European Union in June 2016, until weaker- than-expected wage data pulled the currency back from those highs.
The pound rose against the dollar to a 22-month high, boosted by seasonal inflows from foreign companies sending dividend payments to British shareholders and diminishing concern about a disorderly exit from the EU next year.
Its rally was stymied by data on the labour market that showed worker's total earnings had risen by less than forecast in the three months to February, although few analysts expect the numbers to delay an increase in interest wages that's expected next month.
Wages rose by 2.8 percent, unchanged from the three months to January and weaker than a median forecast of 3.0 percent in a Reuters poll of economists.
After rising as high as $1.4377, the pound had fallen 0.1 percent to $1.4332 at 0900 GMT, just below a previous post-Brexit-vote high set in January.
Tuesday's data is important because the Bank of England has signaled that it needs to see rises in wage pressures before it starts to raise rates to curb inflation. Markets expect rates to be raised by 25 basis points next month.
"I don't think this will change expectations about the May rate hike, but the way the pound fell after the data was released shows that the market is long on sterling, hedge funds in particular," said Jordan Rochester, an FX strategist at Nomura.
He said that renewed risk appetite and continued dollar weakness had helped to keep the pound strong despite weaker-than-expected economic data this month.
Inflation figures due Wednesday could shape views on whether the British economy can tolerate a second rate hike later this year, Rochester said.
Against the euro, sterling fell 0.1 percent to 86.44 pence per euro, still close to 11-month highs.
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