Forex - GBP/USD hits session highs after U.K. construction PMI

The pound recovered from two week lows against the dollar on Monday after data showed that activity in the U.K. construction sector expanded at the fastest rate in six years in October.

GBP/USD hit 1.5966 during European morning trade, the session high; the pair subsequently consolidated at 1.5960, gaining 0.21%.

Cable was likely to find support at 1.5902, the session low and a two-week low and resistance at 1.6045, Friday’s high.

The U.K. construction purchasing managers’ index rose to 59.4, the highest level since September 2007, from 58.9 in September. Economists had expected an unchanged reading.

The report said the housing sector remained the strongest performing area of the sector, while the commercial sector registered the fastest rate of growth since April 2012. Employment levels rose at the steepest rate in six years.

Demand for the dollar continued to be underpinned after unexpectedly strong U.S. manufacturing data on Friday added to expectations that the Federal Reserve could start to taper its stimulus program as soon as next month.

Federal Reserve Bank of Dallas president Richard Fisher said Monday that the recent fiscal standoff in Washington counteracted the role of the Fed’s easy money policies in the economic recovery. The comments came during a speech in Sydney.

Sterling was slightly higher against the euro, with EUR/GBP slipping 0.11% to 0.8462. 

The single currency found support after revised data showed that the euro zone's manufacturing PMI edged up 51.3 in October from a final reading of 51.1 in September. 

Germany’s manufacturing PMI rose to 51.7 last month from 51.1 in September as new orders and production levels rose.