LONDON (AFX) - Sterling firmed and short end gilts fell as the release of February average earnings index showed a rise of 5.9 pct year-on-year vs a 4.3 pct rise in January.
February headline average earnings was expected to have risen 4.4 pct year-on-year, unchanged from January.
Adam Chester, chief economist at Halifax Group Treasury, said: "There was a slight bid to sterling on perception that the earnings numbers can put back a further, near-term at least, rate cut by the Monetary Policy Committee."
At 9.50 am sterling/dollar was trading at 1.4347, while sterling/yen was at 177.86. This compares with 1.4345 usd and 177.77 yen respectively at 9.20 am.
"The biggest impact has been at the short end of the gilt curve, with short sterling falling by four basis points on the back of the announcement," said Chester.
At 9.50 am, short sterling gilts fell to 94.78 from 94.85 at 9.20 am, whilst long gilts were at 116.53, down from a pre-release level of 116.73. " Overall, the immediate reaction was probably over-done on the back of this number," added Chester.