The pound tumbled to a low on Wednesday after a disappointing jobs report, which showed slowed wage growth at the end of 2016. The report highlighted concerns that consumer spending will decrease in the near future.
The pound fell 0.32% against the dollar, trading at 1.2426. Before the release of the report, GBP/USD was trading at 1.2450.
Sterling was lower against the euro, with EUR/GBP up 0.2% to 0.8496.
Unemployment in the U.K. held at 4.8%, an 11-month low, according to the Office for National Statistics. The number of people claiming unemployment benefits declined by 42,400, reaching 787,400 in the month of January.
The Office of National Statistics also reported that earnings, excluding bonuses, increased by 2.6% in the quarter. Earnings are down 2.7% from one month ago.
The jobs report comes a day after the annual inflation report, which showed inflation increased by 1.8% in January.
Elsewhere, demand for the dollar rose after Fed Chair Janet Yellen said the central bank was on track to raise interest rates.
The euro eased against the greenback, falling 0.23% to 1.0552, its lowest level in just over a month.
The currency remains under pressure over concerns of Greece’s bailout and the potential for a hard Brexit.
Sentiment on the dollar improved after Yellen told the Senate Banking Committee that waiting too long to increase rates would be “unwise” due to economic and inflation growth. The Fed Chair also cautioned against uncertainty regarding the Trump administration’s economic policies.
Against the yen, the dollar gained 0.25% in FX trade to 114.54, but against the Aussie and kiwi, the greenback eased.
The Australian dollar gained 0.21% against its U.S. counterpart to trade at 0.7677. The New Zealand dollar inched up 0.1% to 0.7176 against the greenback.
Against the Canadian dollar, the greenback hit a high of 1.3115 in early trade in the U.S., its highest level in three days, before settling at 1.3104.
The U.S. dollar index was up by 0.27% to 101.47, its highest level since January 19.
The greenback gained support later in the morning after the release of consumer price data. Consumer prices were up by 0.6% in January, surpassing forecasts of a 0.3% rise. Consumer prices are up 2.5% year-over-year.
Core consumer prices increased by 0.3%, beating expectations of 0.2%.
Another report showed that retail sales in the U.S. increased by 0.4% in January. Core retail sales increased by 0.8% in January, beating forecasts of a 0.4% gain.