LONDON: Sterling hit an eight-day low against the dollar on Wednesday after data showed UK earnings grew at the slowest pace since the start of the year in the three months to October, even as strong job creation pushed down the unemployment rate.
The main focus of the day will be a Federal Reserve policy decision at 1900 GMT, which is widely expected to produce the first U.S. interest rate rise in almost a decade.
The regular earnings of British workers, excluding bonuses, rose by just 2.0 percent in the three months to October, its slowest since the three months to February, keeping pressure off the Bank of England to raise interest rates any time soon.
Britain's unemployment rate, however, unexpectedly fell to a seven-year low of 5.2 percent in the three months to September.
Sterling dipped to $1.4983 after the numbers, the lowest since Dec. 8.
Bank of Tokyo-Mitsubishi UFJ currency economist Lee Hardman said the labour report was a mixed one that sent conflicting signals to the market.
"On the one hand ... the weaker earnings figures fit with what the BoE has been saying recently: that the pace of wage growth has started to level off, and that's buying them a little more leeway in the near term before raising rates," he said. "So that's weighed on the pound."
"On the other hand, the other parts of the report ... suggest that the labour market is continuing to tighten more quickly than the BoE anticipates."
In an interview with Britain's Financial Times on Tuesday, Bank of England Governor Mark Carney said in an environment where rates are low for a long time, "vulnerabilities" can build. That means tighter and more active macroprudential policy should be expected in order to allow monetary policy to do its job.
He also said he was "married" to the BoE's 2 percent inflation target, and that he would not follow through on expectations of rate rises if that was the wrong thing to do.
The publication of the interview followed the data showing British annual inflation edged back up to 0.1 percent in November, well short of the BoE's target but up from a -0.1 percent reading the previous month.
Against the euro, the pound hit an intraday trough of 72.98 pence after the labour market data.
"We do expect wages to start picking up again in 2016 (and) a renewed dip below 70 pence per euro," wrote BNP Paribas strategists in a research note.
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