Investing.com - The pound pared gains against the dollar on Tuesday after rising to one-week highs earlier when data showed that activity in the U.K. construction sector expanded at the fastest rate in six years in August.
GBP/USD pulled away from 1.5601, the highest since August 26, to hit 1.5544 during European afternoon trade, 0.01% higher for the day.
Cable was likely to find support at 1.5504, Monday’s low and resistance at 1.5635, the high of August 28.
Demand for the dollar continued to be underpinned by expectations that the Federal Reserve will start to unwind its stimulus program at its upcoming policy meeting on September 17-18.
Investors were looking ahead to Friday’s U.S. nonfarm payrolls report which is seen as central to the Fed’s decision on tapering.
The pound advanced to session highs earlier after Markit and the Chartered Institute of Purchasing & Supply said the U.K. construction purchasing managers' index rose to 59.1 from 57.0 in July. Economists had forecast a reading of 58.3.
The latest reading indicated a sharp rise in total business activity and the fastest pace of output expansion in the construction sector since September 2007.
“With overall output levels now rising at the fastest pace for around six years, it seems highly likely that the construction sector will provide another positive contribution to U.K. GDP in the third quarter of 2013,” senior Markit economist Tim Moore said.
The data came one day after a report showed that manufacturing activity in the U.K. jumped to a 30-month high in August, fuelling hopes that the Bank of England may raise interest rates sooner than it has indicated.
Last month, the BoE pledged to keep rates on hold at record lows until the U.K. unemployment rate falls below 7%, something the bank sees as unlikely to happen for another three years.
Elsewhere, the euro trimmed back losses against sterling, with EUR/GBP down 0.19% to 0.8471, after falling as low as 0.8447 earlier.
The Institute of Supply Management was to release data on manufacturing activity in the U.S. later Tuesday.
GBP/USD pulled away from 1.5601, the highest since August 26, to hit 1.5544 during European afternoon trade, 0.01% higher for the day.
Cable was likely to find support at 1.5504, Monday’s low and resistance at 1.5635, the high of August 28.
Demand for the dollar continued to be underpinned by expectations that the Federal Reserve will start to unwind its stimulus program at its upcoming policy meeting on September 17-18.
Investors were looking ahead to Friday’s U.S. nonfarm payrolls report which is seen as central to the Fed’s decision on tapering.
The pound advanced to session highs earlier after Markit and the Chartered Institute of Purchasing & Supply said the U.K. construction purchasing managers' index rose to 59.1 from 57.0 in July. Economists had forecast a reading of 58.3.
The latest reading indicated a sharp rise in total business activity and the fastest pace of output expansion in the construction sector since September 2007.
“With overall output levels now rising at the fastest pace for around six years, it seems highly likely that the construction sector will provide another positive contribution to U.K. GDP in the third quarter of 2013,” senior Markit economist Tim Moore said.
The data came one day after a report showed that manufacturing activity in the U.K. jumped to a 30-month high in August, fuelling hopes that the Bank of England may raise interest rates sooner than it has indicated.
Last month, the BoE pledged to keep rates on hold at record lows until the U.K. unemployment rate falls below 7%, something the bank sees as unlikely to happen for another three years.
Elsewhere, the euro trimmed back losses against sterling, with EUR/GBP down 0.19% to 0.8471, after falling as low as 0.8447 earlier.
The Institute of Supply Management was to release data on manufacturing activity in the U.S. later Tuesday.