Investing.com - The pound rose to five-month highs against the dollar on Tuesday after data showing that U.K. industrial output grew at the fastest rate in six months in March, easing concerns that the rate of economic growth is moderating.
GBP/USD hit highs of 1.5661, the most since December 22, up from around 1.5576 ahead of the report.
The Office for National Statistics said industrial output rose 0.5% in March, the strongest increase since September and ahead of economists' forecast for an unchanged reading after a 0.1% rise in February.
The increase was mainly due to a pick-up in oil and gas activity as oil and gas extraction rose at its fastest rate since February 2014.
For the first quarter as a whole, industrial output rose by 0.1%, compared to forecast for a 0.1% decline.
Manufacturing production rose 0.4% after upwardly revised growth of 0.5% in February, slightly ahead of forecasts for a 0.3% increase. On a year-over-year basis, manufacturing output was just 1.1% higher, the slowest rate of growth since December 2013.
Sterling was lower against the euro, with EUR/GBP up 0.56% to 0.7196.
The euro gained ground on Tuesday as a selloff in global bond markets undermined greenback strength. German 10-year bund yields jumped, narrowing the gap with their U.S. counterparts.
German bund yields act as benchmarks for European financial markets and higher yields push the euro higher against the dollar.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.68% to 94.45, re-approaching last week’s two-month trough of 93.96.
EUR/USD was last up 1.02% to 1.1270.
Greece repaid a €770 million loan installment to the International Monetary Fund early Tuesday, easing concerns that it was on the verge of default, but concerns over the country’s future in the euro area persisted.
Athens is scrambling to reach an agreement with its international creditors on a package of economic reforms in order to access fresh bailout funds and avert a liquidity crunch.