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Buoyant UK jobs and wage data burnish sterling's appeal

Published on Apr 17, 2014 12:15 AM

LONDON (REUTERS) - Sterling rose to its highest level in more than a month against the euro on Wednesday, after British data showed the jobless rate falling to a five-year low and wage growth picking up to match inflation for the first time in nearly four years.

The better-than-expected data bolstered expectations the Bank of England may have to raise interest rates in the first quarter of next year.

That is in sharp contrast to expectations of more easing by the European Central Bank, a factor which led to the widening in the rate yield gap between British gilts and German Bunds to its highest in nearly two weeks.

Sterling overnight interbank average rates - the very short-term interest rates which form the basis of lending costs to the wider economy - rose to price in a chance of a rate hike in 11 months, compared with 12 months before the data.

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