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Pound falls as wage growth dents rate rise prospect

Pound falls as wage growth dents rate rise prospect
The pound has fallen against the dollar after sluggish wage growth figures dented the chances of an imminent interest rate rise from the Bank of England.

Wage growth remained at 2.5% for the third consecutive month over the three months to December, still languishing below the 3% rate of inflation.

That sent the pound 0.6% lower against the dollar to $1.391, while the euro rose 0.3% to trade at 88.4p.

'The latest wage growth figures released today continue to disappoint,' said Maike Currie, investment director at Fidelity International.

'With the Bank of England increasingly pinning the chances of further interest rate hikes on accelerating pay growth (alongside Brexit progress), the prospect of an early rate rise seems unlikely.'

The pound's fall provided a lift to the FTSE 100, helping the index climb out of the red to trade flat at 7,248. A weak pound tends to boost the FTSE 100 as its stocks rely on overseas markets for around three-quarters of their earnings.

Glencore (GLEN) jumped to the top of the index, up 4.5% at 401.5p after the mining company reported a 44% jump in profits to $14.8 billion (£10.6 billion) for 2017.

Lloyds (LLOY) was close behind, up 2.8% at 69.7p, buoyed by the announcement of a £1 billion share buyback.

On the FTSE 250, shares in AA (AAAA) tumbled 21% to 91.9p as the roadside recovery firm delivered a dividend cut and another profit warning.

FirstGroup (FGP) slumped 10.9% to 85.7p as the transport operator downgraded its earnings forecast, as snowstorms and increased competition disruption its North American business.

 

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