LONDON (Reuters) - Sterling rose on Wednesday, extending gains from earlier in the day as better-than-expected construction PMI data calmed investors after a selloff that took the currency five percent lower against the dollar in two weeks.
The currency rose 0.3 percent to $1.3640 after survey data showed British construction activity rebounded faster than expected last month after succumbing to snow in March.
Wednesday’s IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) jumped to 52.5 in April from 47.0 in March. That was comfortably above the median expectation of 50.5 in a Reuters poll of economists and back above the 50 line denoting growth in activity.
With the dollar rallying and a weak manufacturing survey published on Tuesday, sterling had tumbled to its worst level since mid-January, extending a bruising fortnight for the pound which has seen a sudden collapse in rate rise expectations for May.
British government bond futures briefly extended losses to touch a two-day low of 122.02 after the data, down 42 ticks on the day, before recovering to trade broadly in line with their level before the data.
Reporting by Saikat Chatterjee; Editing by Sujata Rao