The pound rose to the day’s highs on Wednesday after the latest UK jobs report showed that wage growth picked up, fueling expectations for a rate hike by the Bank of England, possibly as soon as May.
GBP/USD was up 0.53% at 1.4069 by 05:46 AM ET (09:46 AM GMT) from around 1.4023 earlier.
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 ticked down to 4.3%, the ONS said.
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.
Sterling was also higher against the euro, with EUR/GBP down 0.23% to 0.8726 following the report.