Sterling climbed against the dollar on Wednesday, recovering some of the previous day's losses as the rally in safe-haven assets waned, although gains looked likely to be capped and the pound underperformed the euro. Sterling clawed back 0.3 percent on the US dollar after losing 0.8 percent on Tuesday when investors scrambled for the relative safety of dollars after Greece's decision to hold a referendum on its EU bailout.
Cable last stood at $1.5984, having earlier hit a session high of $1.6048 when above-forecast UK data pushed sterling above the 100-day moving average and triggered stops. UK construction purchasing managers' index data for October rose to 53.9 from 50.1 in September, confounding expectations for a marginal decline.
However, the 200-day moving average at $1.6141 and the October 31 high of $1.6167 were unlikely to face a serious test given investors were still broadly anxious over the eurozone crisis. Traders cited decent selling by corporates above $1.60. The pound lagged the euro, however, which strengthened along with other perceived riskier currencies having hit a one-month low the previous session. The single currency rose 0.5 percent against the pound to 86.27 pence, with traders citing demand from a European national central bank for commercial requirements.