Sterling touches one-week high ahead of UK labour market data

LONDON: Sterling rose to a week's high against a broadly weaker dollar on Wednesday as investors awaited data on the UK's labour market to further gauge the health of Britain's economy as it leaves the European Union.

Investors will be watching for wage growth numbers in particular, with the Bank of England indicating it is in no hurry to raise interest rates partly because of a slack in wage growth despite above-target inflation.

Tuesday's inflation reading of 2.3 percent, which stayed above the Bank of England's 2 percent target, saw sterling touch weekly highs against the dollar.

The pound edged a touch higher on Wednesday, up 0.1 percent at $1.2498, its highest level since April 6.

Against the euro, it was down 0.1 percent at 84.97 pence per euro.

Economists polled by Reuters expected no change to January's 4.7 percent unemployment rate when figures for February come out at 0830GMT, but average earnings numbers excluding bonuses are expected to dip slightly.

"The persistent erosion of the real purchasing power of the UK consumer should over time become an important headwind for domestic demand and growth. The risk of stagflation should continue to haunt sterling and make it unattractive investment in our view," Credit Agricole strategists wrote in a note to clients.