Forex - GBP/USD gains on advancing U.K. manufacturing data

The pound strengthened against the dollar on Wednesday after U.K. manufacturing beat expectations a day after a separate report recorded a pick-up in U.K. construction activity.

In U.S. trading on Wednesday, GBP/USD was trading at 1.6080, up 0.23%, up from a session low of 1.6042 and off from a high of 1.6118.

Cable was likely to find support at 1.5903, Monday's low, and resistance at 1.6208, the high from Oct. 28.

The Office for National Statistics said earlier that U.K. manufacturing production rose 1.2% in September, beating expectations for a 1.1% increase and also up 0.8% on a year-over-year basis, beating forecasts for a 0.7% annual gain.

The ONS said industrial production rose 0.9% in September, compared to expectations for a 0.5% increase and was 2.2% higher than in the same month last year.

A day earlier on Tuesday, data revealed that the U.K. construction purchasing managers’ index rose to 59.4 last month, the highest level since September 2007, from 58.9 in September. 

Analysts were expecting an unchanged reading.

Also on Tuesday, data showed that activity in the U.K. services sector expanded at the fastest rate in 16 years in October.

Markit said the U.K. services purchasing managers index rose to 62.8 in October up from 60.3 in September, the sharpest rise in activity since May 1997. Economists had been expecting the index to tick down to 59.8.

The numbers bolstered the pound over the dollar, as many investors avoided the greenback to wait for the U.S. Bureau of Labor Statistics to release its October jobs report on Friday.

The pound, meanwhile, was down against the euro and up against the yen, with EUR/GBP up 0.08% at 0.8407 and GBP/JPY up 0.45% at 158.74.
The euro firmed on reports that ECB sources said the monetary authority was unlikely to cut rates at its monthly meeting on Thursday despite soft pricing and employment data.

Separately, factory orders in Germany, Europe's largest economy, rose 3.3% in September, far surpassing expectations for a gain of 0.5% and were also up 7.9% on year.

Elsewhere, revised data revealed that the final reading of the euro zone’s services purchasing managers’ index ticked down to 51.6 in October from 52.2 in September but was still higher than a preliminary estimate of 50.9.

On Thursday, the Bank of England is also to announce its benchmark interest rate.

The U.S. is to publish a preliminary estimate of third quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. Meanwhile, the Labor Department is to release its weekly report on initial jobless claims.