Sterling lifted by strong wage growth

Sterling was given a lift yesterday after official figures showed that British workers enjoyed the strongest wage growth since the financial crisis.

The pound was riding high after the Office for National Statistics (ONS) showed that average earnings excluding bonuses grew by 3.1% in the three months to August, the highest level since 2009.

The British currency was trading 0.5% higher versus the US dollar at 1.321 and 0.4% up against the euro at 1.140.

Michael Hewson, chief market analyst at CMC, said: “This is another piece of good news for an economy that continues to be overshadowed by concerns over the current state of Brexit negotiations. If tomorrow’s inflation numbers reverse the sudden spike that we saw in the August numbers from 2.4% to 2.7% then that will be double reason to celebrate the return to the types of real wages growth that we saw throughout 2015 and 2016.”

Inflation is forecast to have edged down in September, as a rise in prices for recreational activities cooled off.

Consensus estimates predict the Consumer Prices Index (CPI) of inflation will have dropped to 2.6% for September compared to 2.7% in August.

The pound’s strength weighed on the FTSE 100, although it still managed to end in positive territory.

London’s top flight closed up 30.18 points, or 0.43%, at 7,059.4.

In Europe, Germany’s DAX closed up 1.4% and France’s CAC was 1.5% higher. A barrel of Brent Crude was changing hands at $80.6, down 0.1%.

The biggest risers on the FTSE 100 were Ocado up 43.6p at 833.4p, Ashtead up 88.5p at 2,061p, Paddy Power Betfair up 280p at 6,570p and Experian up 74p at 1,807p. The biggest fallers were British American Tobacco down 154.5p at 3,176.5p, Tesco down 7.4p at 208.6p, Marks & Spencer down 6.7p at 286.1p and Imperial Brands down 46p at 2,541p.