Investing.com - The pound rallied to one-month highs against the dollar on Wednesday after data showed that wage growth in the U.K. picked up more than expected in the three months to April, boosting the outlook for the economic recovery.
GBP/USD was up 0.54% to 1.5731, the most since May 18 from around 1.5662 ahead of the data.
The Office for National Statistics said average weekly earnings, including bonuses, rose by 2.7% on a year-over-year basis in the three months to April, up from an annualized 2.3% in the previous three month period.
Economists had expected pay to rise by 2.1%.
Excluding bonuses, earnings also rose 2.7% from a year earlier.
The number of people in employment rose by 114,000 in the three months to April and the unemployment rate remained unchanged at a six-year low of 5.5%.
At the same time, the minutes of the Bank of England’s June meeting showed that policymakers voted unanimously to keep rates on hold at a record low 0.5%, but the decision continued to be “finely balanced” for two officials.
Sterling was also boosted by safe-haven buying amid mounting concerns over the approaching deadline for Greece’s repayments to the International Monetary Fund.
Europe wants Greece to make spending cuts worth €2 billion in order to secure a deal that will unlock additional funds before its bailout expires at the end of June and it must repay €1.6 billion to the IMF.
A default by Greece could lead to the country’s exit from the euro area.
But comments by Prime Minister Alexis Tsipras on Tuesday in which he accused the county’s creditors of trying to "humiliate" Greece with more cuts indicated that Athens is sticking to a hard line in negotiations.
The pound was higher against the euro, with EUR/GBP down 0.36% to 0.7160 from 0.7202 earlier.
Chancellor George Osborne confirmed Wednesday that the British government has begun contingency planning to prepare for the “serious economic risks” posed by a Greek default and a possible exit from the euro area.
Investors were also looking ahead to the Federal Reserve’s rate statement later in the day for any indication about a possible timeline for hiking interest rates, which have remained close to zero since late 2008.
Data on Tuesday showing that the number of building permits issued in the U.S. rose to an almost eight-year high in May added to the view that the economy is regaining momentum after a weak first quarter.
Housing starts fell last month following strong gains in April but remained at levels consistent with a strengthening housing market.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.12% to 95.09, holding above Tuesday’s lows of 94.80.