Investing.com - The pound fell to one-week lows against the dollar on Wednesday after the latest U.K. employment report showed a sharp slowdown in wage growth, while investors looked ahead to the outcome of a critical Federal Reserve meeting later in the day.
GBP/USD hit lows of 1.4992 down from around 1.5002 ahead of the data.
The Office for National Statistics said average earnings, excluding bonuses, rose just 2.0% in the three months to October, slowing sharply from growth of 2.4% in the previous month. Economists had forecast growth of 2.3%.
Wages, including bonuses, rose 2.4% down from 3.0% in the previous month.
The Bank of England has said that it would like to see wage growth of above 3% per year before it would consider a rate hike.
The unemployment rate fell to 5.2%, the lowest level since January 2006, from 5.3% in the three months to September.
The number of people unemployed fell by 110,000, the biggest decline since the three months to September of last year, the ONS said.
Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 98.31, holding just below Tuesday’s one-week high of 98.35.
Most investors expect the U.S. central bank to raise interest rates for the first time since June 2006 at the conclusion of its final policy meeting of 2015 later in the day.
Data on Tuesday showing that U.S. core inflation rose 0.2% in November from a month earlier, even as headline inflation remained flat, cemented expectations for a rate hike.
Higher interest rates would make the dollar more attractive to yield-seeking investors in the long run, but a rate hike could also trigger dollar selling in the immediate aftermath.
With a rate hike priced in investors are now focusing on how quickly the Fed will tighten monetary policy in 2016. The Fed has indicated that the pace of rate hikes will be gradual.
The Fed is expected to announce its monetary policy decision at around 2 pm Eastern Time on Wednesday. Fed Chair Janet Yellen is to hold a press conference shortly after the announcement.