May 2, 2018 / 9:02 AM / 2 months ago

Sterling extends bounce as UK construction PMI beats estimates

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.

FILE PHOTO: Pound coins are seen in this photo illustration taken in Manchester, Britain September 6, 2017. REUTERS/Phil Noble/Illustration

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

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