The pound has risen in value against the euro as a report showed wages grew at their fastest rate in six years, fuelling predictions that interest rates will rise.

A report by KPMG and the Recruitment an Employment Confederation, showed an index of wages for permanent workers rose to 62.5, the highest level since December 2000.

This morning sterling stood at 0.6735 to the euro and at 0.5078 to the US dollar.

A further report on average earnings, excluding bonuses, is to be published today by the National Audit Office which is also expected to show wage inflation.

"The inflation data will keep the market alert to the possibility the Bank of England may raise rates further," Ian Gunner, head of foreign exchange research at Mellon Financial told Bloomberg.

"This will be broadly supportive of sterling."

Sterling also rose against the Japanese yen, hitting an eight-year high.
The yen has fallen on speculation the Bank of Japan will leave interest rates on hold next week.