The pound edged higher against both the euro and the dollar on Wednesday (31 August), coming close to breaking the €1.18 barrier for the first time in three weeks.

By mid-afternoon, sterling was trading up 0.08% against the dollar at $1.3101 and was 0.25% higher against the euro at €1.1772. Data released earlier in the session showed the Eurozone's unemployment rate held firm at 10.1% in July, while the region's inflation rate was unchanged at 0.2% in August.

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"The lack of progress on these key metrics will strengthen calls for the European Central Bank to take action with its next policy meeting now little more than a week away," said Chris Saint, senior analyst at Hargreaves Lansdown currency service.

Elsewhere, the dollar was on the front foot against both the euro and the yen, gaining 0.19% against the former to 0.8987 euro cents and 0.44% against the latter to ¥103.41. The greenback was unperturbed by a monthly report on private sector employment, which showed 177,000 jobs were added in August, broadly in line with the reading between 175,000 and 180,000 analysts had forecast.

Some analysts said the ADP figures indicated the highly-anticipated non-farm payrolls report, which is due out on Friday, will show the US economy has added less than 200,000 jobs this month. The non-farm payroll figures are believed to be the last hurdle preventing the Federal Reserve from hiking interest rates as early as next month.

"If the ADP turns out to be off the mark and non-farm payrolls increase by 250,000 or more, as they did in both June and July, then a September rate hike would become a real possibility," said Paul Ashworth, chief US economist at Capital Economics.

"It is more likely that payrolls will come in below 200,000, however, which would probably persuade the Fed to hold off on the next rate hike until December."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, warned against reading too much into the ADP report, adding he was sticking with a "160,000 payroll forecast".