Investing.com - The pound moved higher against the dollar on Tuesday 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.
GBP/USD hit session highs of 1.6242 and was last up 0.18% to 1.6333. The pair fell to lows of 1.6258 earlier in the session, the weakest since December 17.
Cable is likely to find support at 1.6258 and resistance at 1.6440, Monday’s high.
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.
Housing activity growth increased at the fastest rate more than ten years, driven by improving confidence in the U.K. property market. Commercial building work and civil engineering activity both increased at the quickest pace since mid-2007.
“January’s survey provides reassurance that the U.K. construction recovery remains on track. The latest data show positive developments on a number of fronts, with job creation rebounding at the start of the year while output and new business growth was the fastest since the summer of 2007,” said Tim Moore, senior economist at Markit.
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.
The pound’s gains looked likely to be held in check after 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 manufacturing index fell to a seven-month low in January, as new orders slumped.
The poor data sparked concerns over the outlook for the U.S. 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 was higher against the euro, with EUR/GBP down 0.23% to 0.8275.
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.