Investing.com - The pound trimmed gains against the dollar on Tuesday as concerns over signs of a slowdown in the U.S. economy together with fears over a crisis in emerging markets underpinned safe haven demand for the dollar.
GBP/USD was up just 0.04% to 1.6311 after rising to session highs of 1.6344 earlier.
Cable is likely to find support at 1.6258 and resistance at 1.6440, Monday’s high.
Sterling moved broadly higher earlier in the session after data showed that construction output in the U.K. rose at the fastest rate since August 2007 in January, indicating that the economic recovery is continuing.
Markit said the U.K. construction purchasing managers’ index came in at 64.6 in January, up from 62.1 in December, compared to expectations for a fall to 61.5.
The report said strong growth in construction output was boosted by sharp rises in incoming new work. Stronger demand resulted in a marked increase in employment numbers across the construction sector, as well as improved confidence about the business outlook for the next 12 months.
The report came one day after data showed that while the recovery in the U.K. manufacturing sector eased slightly in January, new orders surged on the back of increased domestic demand and rising levels of new business from overseas.
But the pound gave up gains as weak U.S. factory data on Monday reinforced negative investor sentiment in the wake of a broad based selloff in emerging markets.
The Institute for Supply Management said its manufacturing index fell to a seven-month low in January, as new orders slumped.
The data sparked concerns over the outlook for the recovery, ahead of Friday’s U.S. jobs report for January, after December’s report showed that the economy added far fewer jobs than expected.
Sterling also pared gains against the euro, with EUR/GBP dipping 0.07% to 0.8288, up from lows of 0.8266.
In the euro zone, data released on Tuesday showed that the number of people unemployed in Spain rose by 113,097 in January, ending three months of declines, pushing the total out of work to 4,814,435.