Sterling edged lower ahead of British employment data due on Wednesday that will help determine whether the Bank the England will raise interest rates.

The pound slid to a five-day low on Tuesday after comments by Bank of England policymakers were interpreted by markets as dovish, despite new September inflation data being in line with expectations.

The British currency is currently at $1.3175, its lowest point since October 9.

"The labour market figures this morning will be closely monitored in the absence of any clear assistance from the CPI (inflation data)," Craig Erlam, a senior market analyst at OANDA, wrote in a note.

"Negative earnings growth is one of the factors that is likely to weigh on the economy going forward and makes the BoE’s decision on interest rates all the more difficult," he said.

Members of the Bank of England's interest rate-setting committee were speaking on Tuesday to parliament's Treasury Committee.

Silvana Tenreyro, external member of the BoE's Monetary Policy Committee, said upward pressure on inflation from sterling weakness will start to wane in the coming months.

Official data on Tuesday showed Britain's inflation rate hit 3%, above the central bank's 2% target but in line with expectations.

Some strategists argued that even a lack of unanimity at the Bank of England would not alter the likelihood of a rate rise.

The pound was at 89.24 pence against the euro on Wednesday. (Reuters)

Source: www.businessworld.ie