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UK wage data beats expectations

The pound rose this morning after the latest UK jobs report showed that wage growth picked up, fuelling expectations for a rate hike by the Bank of England, possibly as soon as May.

The Office for National Statistics reported that average earnings, including bonuses, rose by 2.8% from 2.6% a month earlier. Excluding bonuses, average earnings rose by 2.6% in the three months to January.

The unemployment rate was down to 4.3%.

The number of people in employment rose by 168,000, while the number of people claiming unemployment benefits rose by 9,200.

The jobs data came a day after official figures showed that inflation in the UK fell to 2.7% last month, its lowest level since July.

The pickup in wage growth, closing the gap with inflation, indicated that the cost of living squeeze in the UK is coming to an end, bolstering the case for the BoE to hike interest rates in the coming months.

In February the bank indicated that interest rates were likely to go up more quickly than previously expected if the economy remained on its current track.

Economists have predicted there might be a rate rise as early as May.

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