LONDON (Reuters) - Sterling rose on Tuesday after data showed British basic wages grew at a record pace, adding to the Bank of England's inflation worries, while the yuan sank to a nine-month trough after China's central bank unexpectedly cut key policy rates.
In contrast, the Russian rouble gave up early gains after Russia's central bank lifted its key interest rate by 350 basis points to 12% at an emergency meeting to try and halt the currency from weakening past 100 to the dollar after a public call from the Kremlin for tighter monetary policy.
The pound was last 0.2% higher at $1.2705, after rising as high as $1.2731 following data showing British wages excluding bonuses were 7.8% higher than a year earlier in the three months to June. That represented the highest annual growth rate since comparable records began in 2001.
The UK unemployment rate, however, unexpectedly rose to 4.2% from 4.0%, but money market traders still expect the Bank of England to raise rates by at least 25 basis points next month on worries high pay growth will lead to second round effects on inflation.
"BoE Sep rate hike bets have jumped ... providing support for the GBP," said Scotiabank chief FX strategist Shaun Osborne.
CHINESE SURPRISE Elsewhere, the dollar gained over 0.5% against the offshore yuan to a 9-month high of 7.3212 as the People's Bank of China (PBOC) cut its rates in an effort to boost a sputtering economic recovery.
The yuan briefly bounced back as major state-owned banks were seen selling dollars to support the local currency.
The dollar index , which measures the currency against six peers including the euro and sterling, dropped 0.1% to 103.04 after hitting a 1-1/2-month high at 103.46 on Monday, buoyed by demand for the safest assets following a spate of disappointing Chinese economic indicators that raised concerns about global growth.
Punctuating those worries, Chinese data on industrial output, retail sales and investment released shortly after the PBOC's rate cut showed unexpected slowdowns.
"China's surprise move spooked risk assets as investors grow more concerned about China's growth outlook," said Scotiabank's Osborne.
"The USD's failure to get a broader lift from the weaker risk backdrop this morning might suggest that investors feel they have adequate exposure to the USD for now," Osborne added.
Against the yen, the U.S. dollar pushed to a fresh nine-month high of 145.865, but was last little changed at 145.5 per yen.
Traders are looking for any hints of intervention, after the dollar's surge above 145 last autumn triggered the first yen buying by Japanese officials in a generation.
"We could definitely see more verbal interventions, but unless the move is driven by speculators and the yen is out of sync with other currencies, maybe there's still some way to go before the actual intervention comes," said Shinichiro Kadota, a currency strategist at Barclays.
"In any case, I think concerns about intervention is definitely putting a lid on the dollar-yen around these levels."
Japanese Finance Minister Shunichi Suzuki said on Tuesday that authorities are not targeting absolute currency levels when it comes to intervening in the market.