Bank halves wage-growth forecast to 1.25% LONDON (MarketWatch) — U.K. stocks held to a small gain Wednesday, but the pound dropped sharply, as the prospects for an interest-rate hike dimmed after the Bank of England slashed its wage-growth forecast. The FTSE 100 UK:UKX +0.44% was up 5 points, or 0.1%, to 6,637.62. The benchmark was little changed from earlier in the session, when a monthly labor-market update showed unemployment fell to a post-crisis low. The pound GBPUSD -0.61% dropped to $1.6724 after the Bank of England in its quarterly inflation report said it now expects wages, on average, to increase by 1.25% this year. That view is half its previous wage-growth projection of 2.5%. The Bank of England has signaled it wants stronger wage growth before it begins raising its benchmark interest rate from its record low level of 0.5%. The pound traded around $1.6774 before the BOE release. It had already been under pressure after government statistics showed average weekly earnings, excluding bonuses, rose at a slower-than-expected annual pace of 0.6%. Sterling late Tuesday fetched $1.6820. The Office for National Statistics also said the U.K. unemployment rate fell to 6.4% in the three months to June, in line with expectations for the rate to hit its lowest level since 2008. The unemployment rate was 6.5% in the three months to May. Shares of interest-rate-sensitive banks rose further after the BOE report, with Barclays PLC UK:BARC +1.54% up 1.4%, Royal Bank of Scotland UK:RBS +2.05% advancing 1.6% gain and HSBC UK:HSBA +1.40% tacking on 1%. Miners were a drag on FTSE 100, with Glencore PLC UK:GLEN -2.40% down 2.8%. Carla Mozee is a reporter for MarketWatch, based in London. Follow her on Twitter @MWMozee.

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