June 12, 2018 / 8:16 AM / 11 days ago

Sterling edges higher ahead of labour data and Brexit debate

* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

LONDON, June 12 (Reuters) - The British pound edged higher on Tuesday ahead of employment and wage growth data and the start of a crucial parliamentary debate on amendments to Britain’s EU withdrawal bill.

Sterling had fallen sharply on Monday after disappointing manufacturing data, and traders are now focused on labour market numbers due at 0830 GMT.

The unemployment rate is expected to remain stable at 4.2 percent in April, while average earnings are forecast to come in at 2.9 percent, in line with the previous period, according to a Reuters poll.

Any better than expected numbers would push the pound higher, given the Bank of England has said it wants to see rising wage pressures before it hikes interest rates.

The pound rose 0.2 percent to $1.3408 and 0.1 percent versus the euro, to 87.985 pence.

After the labour market data, attention will shift to the first of two days of UK parlimentary debates about amendments to the EU withdrawal bill.

Prime Minister Theresa May faces a showdown in parliament with lawmakers later on Tuesday who want a “meaningful vote” on an eventual Brexit deal and to set the government’s “direction” if the house rejects the agreement.

“The focus will now shift today to Brexit and political risks posed by the amendment votes in the House of Commons. The pound is likely to weaken if the government is defeated in key amendment votes at least initially as concerns over political stability will heighten,” MUFG analysts said in a note.

“However, the amendments, if approved, could ultimately help to soften the final Brexit outcome which would be more favourable for the pound.” (Reporting by Tommy Wilke Editing by Andrew Heavens)

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