Asian stocks resumed their recent upward drift on Tuesday, reaching seven month highs even as many traders awaited U.S. inflation due later in the day.

But in European hours it will be UK wage data at centre stage, keeping investors in Britain's pound on guard.

The pound was hovering not far from the seven month high it touched on Friday, with investors beefing up their bullish positions in the currency. Sterling is up 0.7% for the year.

For the past few months investors have been drawn to the pound's higher yield, boosted by expectations that persistent inflation will compel the Bank of England to keep interest rates higher for longer despite a sluggish economy.

Data shows that speculators boosted their bullish sterling position to $4.635 billion in the week to March 5, just shy of last July's nine-year high.

Markets are pricing in August as the starting point for rate cuts from the BOE, while the European Central Bank and the U.S. Federal Reserve are expected to move in June.

Data on Tuesday is expected to show that British pay excluding bonuses grew 6.2% in the three months to January, unchanged from December. Any surprise might lead markets to rethink their BoE bets.

European bourses are due for a strong open, futures indicated, with the pan-European STOXX 600 just shy of the record peak it touched last week.

Among macroeconomic indicators, the spotlight will be firmly on the U.S. inflation report due later in the day, with expectations for a monthly increase of 0.4%, and 3.1% on an annual basis. Core inflation is seen rising 0.3%, which would push the annual pace down to 3.7%.

The currency market was largely muted in Asian hours except for the yen, which has perked up in the past week over mounting speculation that the Bank of Japan may just about be ready to exit its negative interest rate policy.

The yen on Tuesday was on the back foot, though, after BOJ Governor Kazuo Ueda said the economy was recovering but also showing some signs of weakness.

Germany's inflation data for February is the only other major economic event. Also in focus will be quarterly earnings from Manchester United, where the spotlight will be on what comes next after British billionaire Jim Ratcliffe struck a deal to buy a 25% stake in the club to try to revive its fortunes.

Key developments that could influence markets on Tuesday:

Economic events: German Feb CPI, UK average weekly earnings for Jan

(By Ankur Banerjee; Editing by Edmund Klamann)