Sterling rose against a struggling dollar and held steady against the euro on Wednesday, after UK unemployment rose at a slower pace than expected and average earnings picked up.
The Office for National Statistics said the number of people claiming unemployment benefit rose by 1,600 in August, less than the 4,800 predicted by analysts. July's increase was revised down by half to 1,400.
Annual earnings growth in the three months to July rose to 4.2 percent from 4.1 percent in the previous period. "It's indicative of an economy that is looking fairly healthy. Growth is starting to come into question but clearly the jobs market isn't yet suffering," said Chris Gothard, currency analyst at Brown Brothers Harriman.
By 1330 GMT, the pound was up a third of a percent against the dollar at $1.8270, with the US currency taking a knock from weaker-than-expected August retail sales data from the United States.
Against the euro, the pound fetched 67.32 pence, flat on the day, and hovering near a 2-1/2 month high of 67.10 pence.
The Bank of England cut interest rates for the first time in two years last month and recent data has painted a mixed picture of the UK economy.
"The average earnings data provides some support for rate expectations. We had the one cut but people are coming round to thinking that we won't have another move for some time and it balances out the more negative growth data we've had," said Gothard.
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