Sterling fell sharply versus the euro on Tuesday after UK construction PMI data came in softer than market forecasts, and with sovereign selling putting additional pressure on the pound. Activity growth in Britain's construction sector slowed more than expected in October to its weakest in eight months, a survey of purchasing managers showed on Tuesday.
The Markit/Chartered Institute of Purchasing and Supply construction PMI fell to 51.6 in October from 53.8 in September, against expectations for a more modest easing to 53.0. Sterling fell sharply after the release, initially shedding around 40 pips versus the euro. In afternoon trade the euro was up 1 percent on the day at 87.45, having slipped to a four-week low on Monday of 86.52.
Traders said strong demand from a major European sovereign account for euro/sterling looked to be a key factor behind sterling weakness on the day. The dollar was down broadly versus a currency basket but sterling failed to take advantage, trading with slight losses at $1.6014 after dropping back to a session low of $1.5962 in morning trade.